IBM/Lenovo Bios-Update fails on encrypted windows folders

Background: I updated the harddrive of R52 notebook with a non-standard 320GB disk. Because of some broken hardware design on every reboot the BIOS reported a 2010 error and waits for the user to confirm the message. Apart from the fact that this annoying, it prevents e.g. remotely rebooting the machine. Fourtunately IBM/Lenovo provides a BIOS update which at least automatically continues when showing the error.

I used the BIOS update 1.29 and embedded controller version 1.06 executables (non diskette). But every time I started it exited with the dialog box "Createfile returns 2" just before actually doing the update in the last step. I found out that the update tool creates files in the windows profile (somewhere under Local Settings\Temp).

However the update tool cannot access its own files when the Local Settings folder is encrypted using the builtin Windows encryption. Temporarily removing the encryption fixed the problem.