This problem may occur if the Setup program does not delete all the files in the WinDir\System32\Catroot2 folder during the removal of the earlier version of Windows.
To resolve this problem, rename the %WinDir%\System32\Catroot2 folder
To rename the %WinDir%\System32\Catroot2 folder at a command prompt, follow these steps:
1. While the Setup program is running, and while the error message still appears on the screen, press SHIFT+F10 to start a command prompt.
2. At the command prompt, type cd\windows\system32\, and then press ENTER.
3. Type rename catroot2 catold, press ENTER, and then restart the computer.
4. Try again to finish the upgrade.
If you cannot start a command prompt while the Setup program is running, start the computer from a Microsoft Windows 95, Windows 98, or Windows Millennium Edition startup disk, and then rename the %WinDir%\System32\Catroot2 folder. Or, start the computer from the Windows XP CD, and then rename the folder in Recovery Console.