PowerPivot Installation error-"Could not load file or assembly 'Microsoft.AnalysisServices'"

In SQL Server 2008 R2, the msmdsrv.exe process (which is the SSAS engine) includes a reference to the PowerPivot SharePoint integration dll (as do other components). Since the normal SSAS installation does not include the SharePoint integration dll, the registration marks the .NET assembly cache as failed. Later on, when you install PowerPivot, we copy the SharePoint integration dll to the right place, but the .NET assembly cache has already been marked failed from the previous SSAS installation and .NET does not attempt to load it (and you get the error message above).

Solution:

• Recommended  solution: If you are using “New Server” PowerPivot installation option, then delay installing any instances besides SQL Server RDMBS until after you have PowerPivot installed and configured. That way you never hit this error condition. 

Workaround 

• Save the following  code to  to a file and name it as "setup100.exe.config" (no .txt extension)                                                             
  
  <?xml version="1.0" encoding="utf-8" ?> <BR><configuration> 

  <BR>  <runtime> <BR>    

  <disableCachingBindingFailures enabled="1" /> <BR>  </runtime> 

  <BR></configuration> <BR>
• Copy the file to the folder: %ProgramFiles%\Microsoft SQL Server\100\Setup Bootstrap\SQLServer2008R2\x64\ and install PowerPivot for SharePoint.

 References

 http://support.microsoft.com/kb/2261507