I tried giving "EVERYONE" and my system admin account full permission for all these 4 files manually and still installation fails with the same error.

I also tried giving "EVERYONE" and my system account full permission on the parent folder

D:\SQLData\MSSQL.1\MSSQL\DATA where this file exists and still the installation fails.

I also right click on installation file and chose "RUN AS ADMINISTRATOR" and ran it with service admin account and it still fails!

Restarting the windows server before starting the patch didn't help either. Also stopped all the antivirus services and sql server services before the installation and that didn't help as well