I believe the error you are seeing matches this error from the ntdddisk header file:
Code:
SMART_IDE_ERROR ntdddisk.h
# Error from IDE controller
So, given that, either the disk you're installing to is bad or unrecognized, or the USB key is having issues running the setup properly. Have you tried installing to this machine from a DVD, or a different USB key? Also, how was the installation on this USB key created?