I get an error in some file (don't remember the exact name but it was something like iousb.sys) when trying to run the XP setup from an ISO image. It also frequently is unable to read certain files during the initial copy, and prompts me to retry (which never works). I'm wondering if maybe there is copy protection on the Windows XP disks, but I thought there wasn't.
How did you obtain the ISO image? I was having trouble with my XP install as well, but ultimately I concluded it was due to a marginally corrupt CD-ROM. I used Disk Utility to pull an image from the disc, and it failed several times before finally, after some cleaning and reinsertion, it succeeded. From that point, all was well. My point being that if you used a less robust method to grab your ISO, it might be corrupt, and that could be causing the problems you're finding.
