I had a similar problem last year with XP- the system suddenly started crashing with increasing frequency. Reached the stage when it wouldn't boot and I couldn't reinstall or repair , as you say, error messages saying that it couldn't copy files from the CD.
Removed a stick of added RAM, Crucial no less, reinstalled XP and it all worked. Put the RAM back in and that problem has (touch wood) not come up again. Why the memory should have this effect - who knows?