In the title U say Windows xp setup...what's the Win setup have to do with your pictures?
If your trying to copy your My pictures folder , and U have a corrupt photo, then just enter the folder, select CTRL+A and deselect the one unable to copy. Then copy all other files to a new location.
Now, back to the corrupt photo: can U open it with Paint, Picture and Fax viewer or any other image sofware?
If so, open it and try to save to a new location with a different name and maybe even a different format.
Or is it something else?