A repair install, a clean install?
First, that error makes me think of the cd U have (had a simillar error, because of the cd)
Try and borrow another xp cd.
If repair install, try running a chkdsk /r from recovery console (boot from cd presss R, press 1 and enter, type passsword and enter or just press enter if no password. Now type chkdsk C: /r ,if C is your windows installation)
If clean install, try formating in recovery console, then try to install.