When your computer restarts during the SP2 update by using the OOBE (Out Of Box Experience) interface, you receive:
Windows XP Setup is incompatible with this version of Windows. For more information, contact Microsoft.
This problem occurs because Hewlett-Packard computers install the Recovery Console by using the SP1 files from %SystemRoot%\I386.
To resolve this issue:
1. Copy / Paste the following into Notepad:
REGEDIT4
\[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Run\]
"2056 cloaker.exe"=-
\[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Run\]
"2248 cmd.exe"=-
\[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Run\]
"2272 cloaker.exe"=-
2. Save the Notepad files as cloaker.txt.
3. Rename the cloaker.txt file to cloaker.reg.
4. Open a CMD.EXE windows and type:
regedit /s cloaker.reg.