Installation Help. New Build.... Freeze During Copyings Files

Hi, this is my first post and i joined to inquire about what i could be overlooking in my most recent build...

The Components are

Asus P5N-E SLI Nforce 650i
2x1 gb Mushkin HP2-6400 (DDR2 800)
2x Nvidia 8800 GT
Intel Core 2 Duo E8200 2.66 ghz
Lite-On DVD-Ram (sata dvd rw)
Thermaltake 700Watt Toughpower

Hard Drives are older and as follows
Seagate 120 gb hd
Western Digital 40 gb hd

Whats happening is basically i reformat the drives and during the XP Home Discs process of copying files for the installation, the process freezes the system anywhere from 11% at driver.cab to 54% at some random file (i didnt take note). I have tried 2 different XP home Discs (both legal etc.) and two different disk drives, though both are new... and still it is yielding the same result. I have also tried loosening the ram timings to 5-5-5-15 (they are rated at 4-4-4-12). No luck!! and this is beggining to wear me down...

Any suggestions?

Any and all help is greatly appreciated!

I just tried another HD (its a new Western Digital 250 gb) and same deal. Im gonna run memtest :-X and report the results