I was doing the same thing I did on two other computers and windows installed fine. I clean installed windows xp on my friends PC just to make sure of the discs, he was going to give it away, but now it's running like new. So I pretty much knew what I was doing and I knew the discs were working fine.
On my PC...
First I did a quick Fat32 format and it worked, I installed all the basic programs (norton, microsoft office, anti spyware programs, mozilla etc.
worked fine for a day, then it crashed. I tried to recover it with the installation disc, but got that message. So I tried all the other formats, complete and quick, FAT and NTFS. I was never able to get up to the installation page after the initial reboot (approx 39mins to go page). I kept getting that message.
I havent altered anything physically.
Primary Master 20gb
I've done google on my 'fatal system error' message and the microsoft website said something about the recover console, which I can get to but I don't have a clue how to use it.