K8N and SATA HDD problems

I am having a heck of a time with this computer build. I will list the specs at the bottom of the message for everyones review. Here is the MAIN issue.

I cannot get Windows XP to load fully without experiencing the following error:

Fatal Error

One or many of the components required to complete setup cannot be installed. Check to make sure that the disc is not damaged or dirty or that all of the files are at the source (network Install)

Data Error (cyclic redundency error)

Cannot load "ASMS" component d:\i386


Resolution:

I have been back to the store where I bought the Windows XP and witnessed them switch it for another sealed new copy of the disc. I got back home and experienced the same error. Always at the same point in the installation process which is after the first reboot and with ~39 minutes left to complete installation. You can hear the CD "spin-up" real fast and then all of a sudden the drive clicks and moments later the error will appear. I have tried 3 different CD/DVD-ROM/DVD drives to read the disc's and each time with each different drive I get the error at the same point in the installation. The system does not exhibit any other signs of problems (during the numerous re-formatting from NTFS to FAT back to NTFS) with retaining the information that does copy to the hard drive. And NEVER has the system had any issue posting or entering the BIOS etc... Everything seems to be pretty standard with all my previous builds.

Also I have tried using the Xcopy function in FAT configurations and at that time there were errors in copying some of the files to the hard drive. They didn't seem important (gifs, jpgs...) so I continued with the installation and lo and behold I got an error asking me to point the PC to the i386 directory on the hard drive. I try and try to direct it to the source files in these cases and it doesn't take, it just blinks and doesn't proceed to continue.

Theory:

THIS IS THE FIRST system that I have attempted to build using SATA devices (The hard drive and dvd writer). I have been attempting to load the NVidia Nforce Storage Controller driver (from the ASUS CD) during the F6 screen but whether I load it or not (in NTFS or FAT) I get the same results. I have not yet had the chance to try any other type of HDD with the current setup, hopefully I will be able to do so soon. I am using the onboard SATA ports on the motherboard NOT a controller card.

The XP Home disc that I was sold is a full version INCLUDING SP2 but was sold to me as a "OEM" disc, on the documentation it states that it should only be distributed with a new PC. This was sold to me by a large computer superstore because I was buying all the part to build a PC from them. I am curious to know if perhaps this OEM version is not all that it should be in terms of installation prompts/pathes and data as compared with the Retail Upgrade or Full version...

Bad disc, what is the chances of getting two bad discs in two days... I am thinking that this is not the true cause as the discs look fine.

Help is appreciated in advance, I leave it to you folks to show me the way on this install. If I can get it running it should be a blazing setup...

Specs: Only what is currently connected to get this thing going...
AMD Athlon 64 3200+
ASUS K8N mobo with onboard audio
Nvidia Nforce3 chipset
2 IDE ports
2 SATA ports
Numerous onboard USB connections
1 512meg DDR 3200 Kingston Xtreme Dimm
Maxtor 250 Gig Sata Ultra series hard drive (SATA 1)
ATI All in Wonder 9600
Samsung CD/DVD-ROM combo drive (IDE 1)