I also found this posible solution on Microsoft's website.
http://support.microsoft.com/kb/324103?
Other potential causes of a "Stop 0x0000007B" error message include:
The boot volume is corrupted and cannot be initiated by Windows XP. If the file system is corrupted and if Windows XP cannot initiate the boot volume during the startup process, either move the drive to another computer that is running Windows XP and run the chkdsk command on that drive or try to create a parallel installation of Windows XP on the drive (in a separate folder). The Windows XP Setup program checks the integrity of the volume before it copies files, and it may fix some problems in the process.
You are installing Windows XP on a mirrored boot partition that was created by Microsoft Windows NT 4.0. Windows XP does not support Windows NT 4.0 Ftdisk volume sets. If you are running Microsoft Windows 2000, you must convert all Ftdisk volume sets to dynamic volumes before you upgrade to Windows XP. If you are running Windows NT 4.0, break any mirrors and back up all the data on the stripe, the RAID5, or the extended volume sets before you upgrade to Windows XP. Ftdisk sets might not be accessible after the upgrade.
There are also notes about a boot sector virus that can contribute to this issue, but since you tried a brand new HDD and encountered the same problem, it's most likely NOT the issue.
Remove all hardware other than ram, vid card and hdd and cd/dvd, try again and report back.