I just had a problem like this while reinstalling xp on a friends machine. For me the error came while Windows was copying the installation files, it would all of a sudden say it could not copy somefile.dll file: Retry, Ignore, Exit.
After a process of elimination it (my problem, anyway) ended up being a bad stick of RAM. Once I pulled the offending RAM from the machine the installation went fine.
The steps I used was:
1) try installing on another HD this should rule out the HD as the problem
2) try installing using another optical drive this should rule out the CD/DVD Drive as the problem
3) then I googled the problem and somewhere told me to check the RAM: EUREKA!
Not sure if this will help you, but that's what got me going again.
