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The error you are getting is most likely due to physical damage to the
harddrive.
The format utility with XP install tends to stop on surface errors,
instead of locking them out.
Run scandisk utility and do a surface scan and you will probably find
damaged clusters.
If you decide not to get a new HD then you will need to lock down the
bad sectors with a disk utility prior to installing XP, and retain that
file system.
Regards J
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