There are some cd repair kits available for covering over minor scratches. Another thing that comes to mind about seeing the installer freeze up would the optical drive simply binding up once it starts getting busy reading the disk.
The quick dos command to list all files in the root directory only takes a second or two while the continuous reading of the disk seen during an installation is a little more then then the old drive can take. The question about what floppy drive is being used would concerm a problem being seen with the floppy itself as far as the load with cd rom support if something is lacking there.
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