It could possibly be memory errors causing this - click here and download and install memtest on a boot floppy or cd-rom and run the tests
alternatively you can try copying the xp setup files from the cd rom to the hard drive and install from there - you will need to boot from a floppy or cd with the dos os loaded - download a file and make a floppy from click here
to copy xp cd files to hard drive
xcopy d:\i386\*.* c:\i386\*.*/s/e
then c:\i386\winnt.exe to install
I had to do this once on a mates pc - it just would not load from the cd - I even changed cd drives and it made no difference.
Good luck, I am going away to work for a couple of weeks and will try and look in to see how you get on.