Well i did get it to work. But heres how i got it fixed.
When i first got the zune (yesterday) i plugged it in for recharge put the cd in and installed the software. Everything went easy and smooth no problems. Until i discovered my Ultratv USB VIDEO wasn't working but the audio was fine. And so i decided to do a system restore before i had installed everything. When i tried installing zune software thats when i got the error. Now its to my understanding that when i did the system restore it might have caused an error or problem with the zune making it uninstallable or un-un-installable either.
After hours of reinstalling try new things i decided what the heck i'll give it a go tomorrow. I unplugged my Zune and started browsing around in it, checking out the features etc.
Then subsequently i decided to try the Ultra TV USB again for no reason in particular, and IT WORKED. Thats when everything fell into place.
My Zune can use tv ( not exactly sure how) and i think it was sucking out the video from my Ultra tv into it.
So short version. Unplug Zune before using TV and solved.
Edit : By any chance does anyone know where to download video codecs fr "windows movie maker" i'm trying to convert a video by opening it with windows movie maker and saving it as .wmv but i dont have the proper codecs for windows movie maker. Any links would be appreciated.