Installation's first reboot elicits "Disk Read Error"

I'm trying to install Windows 7 Home Premium on an old underpowered Dell Dimension XPS T700r with a P3 chip running at 700 MHz, 768 Mb Ram, and an old ATI Rage Pro 128 display adapter. It runs XP Pro just fine.

All seems to be going well as Setup copies and expands files until the first reboot, when I receive "Disk Read Error, press Ctrl-Alt-Del to restart". This occurs using several different hard drives of sufficient capacity. It also occurs when I try the installation from a flash drive after mounting the Windows 7 ISO on Virtual Clone Drive from within XP. I've tried to install Windows 7 Starter but it, too, chokes at precisely the same point. I've tried all this on an similar machine with comparable but different components. Same result with all these attempts.

I know I'm try to push the envelope in a downward direction here; Windows 7 Upgrade Advisor issues the standard warnings on processor speed, ram, and display adapter, advising that any installation will be sluggish and that the graphics adapter will not support Aero. But I'd like to see how sluggish.

Any ideas out there as to why this install is choking where it does?

Thanks.