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Clickonce Fails with HRESULT: 0x80070005 (E_ACCESSDENIED))

Activation of https://Contoso/SmartClientLaunch/Project/ProjectEditor.application? resulted in exception. Following failure messages were detected:
+ Access is denied. (Exception from HRESULT: 0x80070005 (E_ACCESSDENIED))

* That means the ClickOnce deployment framework is not able to either write to file system / registry. Make sure the user has read/write access to

File System : %system drive%\DOCUME~1\<user name>\LOCALS~1\Apps\2.0
Registry      : HKEY_CURRENT_USER\Software\Classes\Software\Microsoft\Windows\CurrentVersion.

Workaround
==========
To Provide Privilege to file system We could delete the contents of 2.0 and run Mage -cc on the machine if Possible(Mage is command line utility comes with Windows SDK)
If Access denied is because of registry, Delete the Registry
%userprofile%\Local Settings\Application Data\Microsoft\Windows\UsrClass.dat
Reboot the machine should recreate it. However to Delete this file you have to login through different User profile