[Lsdmeasap]

Well if the above two files do not work I really think that XP install disk is crap, or your disk is dying. Wanna run HDdlife on it and see what it's health is? >>>
HDDlife® - real-time hard-drive monitoring utility with alerts, malfunction protection and data loss prevention functions. This hard-drive inspector is a proactive hard drive failure detection system that controls 100% of hard-drive risks.

But even if the XP disk you have is bad, the above cmd file I made should take care of all that. And again I would say skip SP2, go right to SP3 since you have Sp1 installed