This is an old issue, about a year old. And I have had the same problem back in April. Are you absolutley sure that you have all the current updates and SP1 on your system and then attempting the work around from Microsoft?
And before you attempt these steps again, try one thing. Copy the contents of the cd to a new folder on your hard drive and make absolutely sure that it sucessfully completes a copy. This ensures that the disk is in good condition.
here are the steps again.
WORKAROUND
Method 1: Change the Memory Settings for Installation
To change the memory settings for installation, follow these steps:
Click Start and then click Run.
In the Open box, type msconfig and then click OK.
On the BOOT.INI tab, click Advanced Options.
In the BOOT.INI Advanced Options dialog box, select the /MAXMEM= check box, and then change the setting to 256 (or lower if your computer has less RAM).
Click OK to close the BOOT.INI Advanced Options dialog box.
In the System Configuration Utility dialog box, click Apply.
Click OK to close the System Configuration Utility dialog box.
Click Restart to the following message:
You must restart your computer for some of the changes made by System Configuration to take effect.