|There reason you can not work from COPIES of the XP install CDs is because they contain tricks to detect that you are running from a COPY. Primary one is LOCATION of the file pieces ...|
unlike your COPY, they are intentionally SCATTERED so reading takes longer than it should. IF the installation program finds your drive gave it up too quickly, it will bomb with a 'can't read' error. Imagine that!
You can confirm this by simply copying the entire installation CD to something fairly slow, and listening to the head moving around in the CD drive.
The only way a COPY will work is if you make a BIT LEVEL COPY. Every BIT has to be in roughly the same place as on the original, something the FILE ACCESS MODE of copying will not let you do.
You need to make an EXACT IMAGE of the original CD.