Just thought I'd post this in case anyone finds it useful (like ME in
the future!). I found the same error many times
googling for an answer, but no solutions. I tried something simple on
this computer and it worked.

Error:

During XP install it stops and says this: An error has been
encountered that prevents Setup from
continuing.

Other messages I've found around the internet show that It always
seems to happen at the ASMS part of the install.

Solution: Well, this will only work on specific computers obviously
but it could be a useful clue. I just used the other CD-rom drive!
This computer had 2 and I was installing from the top drive. After
trying another XP disk and a few other ideas I found online (nothing
worked obviously), I just stuck the original CD into the other drive,
rebooted, and all is well now!

Very odd! Hope that's helpful to someone.

Scott