Insufficient disk space on Windows 7 standard thin client

We recently upgraded our sepm from version 12.1.1 to 12.1.2, to fix a SEP space issue problem mainly on our thin clients.

After the sepm upgrade (which was successful) we began to push out to the windows 7 embedded (32bit standard) thin clients via the sepm install wizard. Using a small sep footprint we pushed to one thin client for testing. The thin client had 500mb free space, before the push. Afterwards we noticed, via the sepm gui, the thin client's status was "install failed and it was reverting back to the original version".

Has anybody else experienced this issue?