"While trying the XP SP2 upgrade I get this error "can't find file." Doesn't say what file. This happens just after the files are copied from CD to the C: drive."
I'm assuming this occurs after sp2 is installed.
Is this the exact (word for word) error message?
This seems very unusal that it doesn't name some file.
As David Chan related, any spyware adware or viruses on a machine will most likely create some havoc with sp2.
Did you run scans with virus, spyware, adware programs, before the install? Grif Thomas, for one, has covered this issue in some detail in this forum. He also notes that he deletes all temp files, cookies and such in addition to the scans. I followed that lead and installed without any problems.
You can uninstall in Control Panel, Add/Remove programs. Clean the machine, then reinstall.
Hope this will be of some help.