Error message 0x80000007 when installing SP2

I did a complete reinstall of XP Home on a Dell Box. It went mostly without
a hitch, until I went to Windows Update. It successfully installed a number
of updates, but then failed on a few of the smaller ones with error messages
0xF00D and 0x20. I reran the update and everything installed ok.

It then offered to installed SP2. I did the full download once, and as it
was installing I got a balloon message that a file was corrupt and I should
run chkdsk. I ran it and chkdsk found and fixed a few problems.

I then tried to get SP2 two more times, and both times it did the full
download (30 min) and then failed with error 0x80000007.

So what's going on here? I'm hoping there's no hardware problem.