It seem to me that your hard drive is healthy but your OS CD is messed-up... it is entirely possible that you have a bad copy, remember that Microsoft OS CD's are not pressed in Redmond
Here is a solution I could offer, Get a Windows 98 SE OEM boot disk (YES, Windows 98 SE OEM boot disk) from this site.
http://www.bootdisk.com/bootdisk.htm
Boot form the disk and destroy the current partition, then make a new partition, format and then make a directory on the hard drive "i386" , now copy all the files from the XP Home CD i386 directory to the hard drive's directory .... and finally start the setup from the hard drive...... when you get to the formatting the hard drive option / select the current setting meaning don't change the partition to NTFS (you can change that later ), see if this would fix the issue, if not I would call Microsoft and let the know that you got a bum CD with bad copy.
Cheers
__________________
Have you Googled today!
AMD Athlon 3200+ 2Gig RAM, OS: XP Pro
VMWare 6.xx, Guest OS: DOS622, 98SE, Windows 2K, Windows XP Home, FreeBDS 6.2, MEPIS, CenOS44, Windows 2003 Server SBS, Windows 2003 Server Enterprise, Windows Vista Ultimate
|