XP recovery failure

XP will not boot from disk to complete a fresh install.
Trying to bypass bootable disk by accessing the i386 folder in my computer C drive WINNIT32.exe with product key.
To discover that the aleabanr. gif will not copy over to the C:\$WIN_NT$~LS\i386\aleabanr.gif.
Any idea on how to place this file in manually through cmd prompt or other means.
It does give me the option to bypass the file.
But I'm pretty sure that this is the whole Issue with OS, that's why I'm trying to do a fresh install of Windows XP or should I just try and go straight to 7.
Will the PC let me or must I go to Vista then 7?