Yes it is Service pack 2, I'll try the nLite thing.
Edit: Used nLite and integrated SP3 into the installation and burned it, but I'm skeptical about this. I'm about to try to install with it, I'll see how it goes.
Edit2: I tried using the integrated XP, but it actually failed during the partition...
Edit3: I created a partition with Gparted, then tried installing with the slipstreamed disc, during the copying files part, it got to 7% and failed to copy driver.cab ; I'm frustrated and confused
Edit4: Should Gparted only be taking one second to create the partition? After I click the apply button, it literally takes 1-3 seconds and it says it is done. Comparatively, the Windows XP partition device took an hour(not the quick one).
Edit5: Used my friends DVD drive, that turned out to be the problem. The old one must not have been reading it properly. Just have to buy a new DVD drive now.