Cannot install windows xp

Hello,

today I bought a new PC for my daughter. Pentium quad;sata hard drive, all good stuff. There was no O/S installed, because that saved us 100 Euros, and I had planned to put the existing h/d in the new PC. This turned out not to be possible because it is an IDE H/D; so I decided to do clean XP Home install. Ist problem is that when I partition, the first drive letter is H. I figure I can solve this later & finish the install. Then I need to install all the drivers from a seperate disc. All goes well until I come to the USB2 controller; the installation program finds the files but immediately they start transfer, the whole system locks-up. After 5 attempts I give up.Then I need to download XP Service Packs, so I have to register with Microsoft. Turns out that this is not possible, even though I have a legal copy and an active internet connection; I keep getting a message saying that it is not possible to contact MS and please try later. I must have installed windows at least 100 times; I have never experienced these problems before. I plan to go back to the store, but thought I would ask for your advice in the meantime. Is it possible that my new system is too new & requires Vista to run properly? Any suggestions most welcome.