System32 error with new install, new harddriv

Hello,
I have an H laptop. Began receiving various error messages/blue screen etc. Retrieved files between minute by minute freeze ups and system32 errors.
After being taken to repair shop three times, and having my hard drive re-formated and WinXP installed over and over...finally bought a new hard drive and installed it.
Now it boots up fine, but wants to run service pak3 and during install of that, it crashes and goes back to blue screen and system32 error again! so frustrating and could have bought a new laptop for the money I have put into this one! (now can't buy a new one!)
I have set it to boot on CD so I can boot up but why would a new harddrive have this issue? or is my winxp program corrupt? I have the orignial disk and it has been used four times now. Kept in original packaging.
what can i do? I see on line at microsoft the steps to fix system32 errors but says not to use if OEM winXP on machine. The hp dv1060 came with pre-installed winxp.
thanks for any help i can get!
kris