is your installation cd scratched? what kind of laptop do you have? I havent had to try and install XP OS on a pc form the harddrive because i've never screwed up a cd before. on most of the previous ms os's, you could have tweaked it all to install off of the hard drive= that's what i was going to suggest to you. try to see if you can copy everything to the harddrive (including driver.cab) and then run it from there. You could probably even use a CD emulation proggie to trick the software into thinking its being ran off of a cd.
like i asked before, what kind of laptop do you have and is it an OEM cd? = example, is it a dell and your only OS installation cd is a DELL OEM restore cd?