Windows XP setup: setup.sys could not be loaded. Error code is 7.Cant install xp

Earlier I had problem that my windows could not start, I have asked same question in eTI already but then I decided to try to repair it. For that I booted computer from windows XP installation cd but setup is also getting stucked.
It gives error..
File setup.sys could not be loaded
Error code is 07
I thought I will reinstall windows xp but even setup is not running.. how do I solve it

Basically this error comes up due to incompatible hardware in your computer. But chances are more that some of the hardware in your compute is malfunctioning.. may be a loosely fixed LAN card etc.

If hardware is fine then try turning off ACPI in BIOS !

i had the same problem but it was error code 14.what i did was check to make sure all hardware was seated properly then in the bios i changed the operating system to other and it worked.it was a hp xg833