This is because a slipstream creates more than 7 levels of subdirectories under ASMS (in other words, a path which is more than 8 total directories deep, the maximum allowed under the ISO9660 standard).
Your problem occurs at the "39 minutes remaining" point of Setup, when CD-ROM access is still controlled by your system BIOS (not by Windows' own code). The BIOS on most systems can reliably read non-compliant ISO9660 file systems, but some systems have a hard time. Usually, the BIOS wasn't specifically written to restrict the path depth to 8 but it also wasn't specifically written/tested to handle a path longer than the max expected. It's like having a car which may or may not steer reliably at a speed of 120 miles per hour; the car makers don't specifically prevent you from going that fast, but they also don't design/test for such speeds.
If you have a system where this problem occurs, it will probably also occur with a factory-manufactured Integrated SP2 CD-ROM. In other words, there's really nothing wrong with your procedure. The only things you can try are:
1. Updating your system BIOS (if an update is available) and/or swapping out your CD drive.
2. Burning at a slower speed than the max/default for your burner. In theory, this should not make any difference. In the real world, however, there's a certain amount of variance which typically occurs. We're talking microscopic level differences, but sometimes it's just enough to satisfy the tolerances that your system can handle. Also, if you are burning in Track-At-Once mode, try Disc-At-Once (DAO) mode instead, and make sure to close the session (usually called "Finalize" in burning software).
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