I am having the same problem. Were you able to fix this?
I'm running Windows 7 x64 here. I don't use PMM 3 (I use the older Music Manager), so I don't know if all of this will be helpful.
With PhatNoise Music Manager 2.35, I just installed it and clicked ignore when the Natural Voices sub-install errored out. That got me a complete PMM install with no Natural Voices, just as you'd get if you downloaded the web / trial installer from PhatNoise way-back-when (since PhatNoise had to pay royalties to AT&T, they didn't include that with the trial version).
That got me a version of PMM that could only generate speech with Microsoft Anna.
I then installed all of the 1.4 Natural Voices (I own all of them, for PhatVoice testing). They all show up fine and work. Depending on the age of the particular voice setup file, some of them error out with a "not supported on this operating system", but then Windows 7 pops up a "This application may not have installed correctly - do you want to retry with suggested settings?" box, and upon accepting that, the voice installs fine. The newer ones don't generate that error and just install.
It is a shame that PhatNoise continued to ship the obsolete 1.2 AT&T version long after 1.4 was available. That may have been because AT&T didn't want to sell the voices as standalone products any more.
The Speech SDK should
NOT be installed. Windows 7 (and Vista too, I think) include newer versions than the standalone SAPI 5.1 installer (5.3 on Vista, 5.4 on Windows 7). I don't think there are any legit standalone installers for SAPI 5.3 or newer, per
this Microsoft Speech Blog. Unfortunately, that seems to mean that the TTS executable demos are no longer available without downloading the whole Platform SDK. But you don't need it to generate speech with PMM / PhatVoice. I'll be revising the PhatVoice documentation to include information on Vista / 7 in the future
