Hey, My friend is using Windows XP Professional 32 bit, he asked me if I could reformat the computer for him and I faced some problems, first off sometimes it said that the installation CD was missing a file (the cd is a genuine copy of XP) and the other time it said that it couldn't found the hard drive.
I goggled and came across nLite, I figured i'd try to insert drives in order for the installation CD to detect the hard drives, but haven't had any luck with finding appropriate drivers/nor getting the inf file from them.
If the CD is scratched or smudged it can have a hard time reading the data off the disc. A poor optical drive can also cause similar symptoms.
Try cleaning the disc with water and a soft cloth. Try the install a couple more times, if it always says the same file is missing, it's likely a damaged disc. If it's a different file each time, it could be a bad optical drive.