One common cause of the subject error is that you created new setup floppies but didn't use the WINNT /OX command.
Running WINNT without the /OX switch, cause WINNT.SIF to be placed onto diskette 2 of the 3 diskette setup disk set. The WINNT.SIF file contains:
MsDosInitiated = 1
which tells setup to look for the installation files on a temporary directory of the hard disk.
To fix the problem, do any of the following:
- Edit the WINNT.SIF file and change MsDosInitiated = 1 to MsDosInitiated = 0.
- Delete the WINNT.SIF file.
- Discard the diskettes and run WINNT /OX from the CD-ROM.