If you swear by all your hardware being okay - hd's, memory, cd reader, power supply; then your install cd is bad.
I've come across cd's whose dye has deteriorated or had some poor quality spots, causing errors. So, try this:
Try the install on a different comp (friend - acquaintance). Take one of your hd's and temporarily install it as Master. Unplug your friends' hd's in the meantime. Assure him/her that nothing will happen to it/them.
If the install works, the cd is okay & you've got a hardware problem on your machine. Settle that issue; format your drive, and try the install again.
If the install fails on the friends' comp, that cd is bad.
I hada similar problem with my install last night. I had a srlient.dll file not present so no installer program would work. IE would not install either. Then my CDrom decieds to trhow my disk around in the drive ands rub the edge of the disk and scratch it. Now no one will take it back cause its scratched and the install process is even more srewed up because f the scratches. What i did is downlaod a OEM version of disk one and burned a copy of it. I will retry my install tonight keeping fingers crossed that it is a true oem version because my cdkey is a OEM version. I tried the other rig and even copying the disk that was messed up but the scratches gave me errors around 90% complete.