Boy was that fun! Spent half a day Googling error codes and trying to circumvent an assortment of problems with my installation. To cut a very long story short, seems there was a bit of a balls up on the part of Microsoft regarding the order in which the discs are loaded. This was a 3 disc OEM set. XP disk 1, XP disk 2, and a separate updates disc. You are prompted for XP disc 1, then XP disc 2, then the updates CD. What it actually needs is disk 1, then disc 2, then disc 1 again. Disc 3 you throw away because it won't work anyway and then you download and install Service Pack 3. Many thanks to "craigwatanabe" who posted the original question on "tech spot.com" and "civdiv" who answered and finally solved it. Aren't these forums great?
Anyway it works great now, what other operating system is ready to go about 60 seconds after you hit the power button? One of the reasons I like XP so much. The validation process took seconds to complete by the way, so MS are still honoring that part of the process.