I had the same problem after switching over to WinXP from Win2K. My personal copy (legal) of Office2000 encountered an error reading a file halfway through installation. I tried all the MS fixes, to no avail. I cleaned and polished the disk. Luckily, my employer's site license allows me to install the MS products we use at home. The install disks given me by our IT folks did the trick. I am assuming the disk was bad since my old Creative 52x CD-ROM tended to FuX0r disks. Hell, it makes a great paperweight now...
My system:
1.4 Athlon
FIC AD11 266mz fsb