On some old systems during that install only 1 usb port is enabled. Retry the setup using the various ports. Usually its one near the network jack.
well i managed to get it fixed 10 an hour after i posted this. the port where the keyboard was pluged in was working after i left t he PC turned off for 30 minutes (a bit weird) and could do a complete install of the OS without problems. The reason for the problem was that my dad switched off the secondary hard drive while the windows setup was coying files.