Problem with XP Home install - component failed Microsoft Logo testing, install aborted

I have been trying to re-install XP Home on a friends computer and keep getting an error saying that several files "failed MS Logo testing" and their installation has been aborted.  Everytime that I try to repair the installation a different file seems to fail, is missing, corrupt, or otherwise unusable.  I can get to the point where XP will boot, but opening IE causes it to become unstable.  IE will crash, send an error report to MS, then Windows Explorer will restart.  I managed to install Mozilla Firebird and keep it working long enough to install SP1, but that did not seem to help much.  I fought through the IE crashes until a installed all but one of the critical updates, the the security update rollup, but the problem has persisted.  I have installed the latest available video driver, NIC driver, etc. but the problems persist.  I even tried simply booting into XP and letting it sit for a few minutes.  It did fine until I got impatient and tried to open IE again.  I've run sfc /scannow and it finds different problems everytime that I run it.  I've even had the computer tell me that the XP disk has errors on it and should be replaced (I'm starting to suspect this may be the case).  Currently I'm reformatting the harddrive and reinstalling for the 200th time.  Does anyone have any other suggestions?