Well there is another way to get around this problem. I have windows XP SP1 CD as well and I was having problems with an installation. The way I got around this problem was to make a new Windows XP CD using your original CD (legally purchased) this is the step you need to follow to accomplish a SP2 Slipstream.
1. Copy you Windows XP CD to a new fold on your desk top (E.X. c:\windowsXPSP2)
2. Download Windows XP SP2
3. Click on start > Run > cmd
4. Then navigate to the folder where you have SP2 downloaded
5. Type the following command line Service pack filename /integrate:C:\windowsXPSP2
6. Wait for a message saying integration successful
7. The take the file you placed in windowsXPSP2 with the newly added SP2 file content and make a new BOOTABLE CD.
8. Then the windows will install using SP2


Also here is a link to a web site that goes through more detail about this just in case you need additional information on how to do this. http://www.helpwithwindows.com/Windo...p2-bootcd.html