You seems to be the lucky one, vanblah. I have to conclude it is incompatible with certain hardware configurations. There is too much circumstantial evidence pointing to a problem with SP3. There is now a third machine that failed: another friend here in my dorms installed it on her desktop computer, and her computer does not boot anymore. I don't know what magic needs to be done for successful install, but three failures now and the only thing that links them all was an SP3 upgrade. I know I will not upgrade to SP3.
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