Machine AMD3800 - MSI Motherboard
I decided I want two OS on my old system. It appears that the older drivers for the RAID system work better in XP, Win2000, etc and there isn't any Win7 updates.
I tried installing XP with SP3 (not final) and then do Windows Updates. It was a disaster.
Later I decided to install XP with SP2 that went smooth. But SP3 was another headache.
I ran into the above error while trying to install SP3 from ISO file using SlySofts virtualDisk.
The solution is to something other than SlySoft Virtual Disk like MagicDisk or even burn the disk to a CD.
Also as another precaution to run the update in Safe Mode according to what I read. It couldn't hurt to avoid more potential after SP3 errors.
Service Pack 3 surely is a difficult one to install much like installing Service Packs in NT4.
I usually re-install the OS with the latest SP already installed but the one I got last time with SP3 wasn't the final one.
So far SP3 is holding out ok ... later I will do some windows updates
If something breaks major - then I will try again with XP with SP3 Final.
I notice that Win7 USB sucks on the old system - XP is better at hot swapping USB detection.