Windows XP SP2 install error "missing registry key"

[jonesre]

this is a new one on me.

A dell desktop with windows xp pro (installed using an upgrade disk, previously, it was windows 98) in a corporate setting, with windows 2000 domain controller.

the current user is the 3rd user to have this box, she has both local and domain admin privileges.

When she signs on using the previous user's login information, everything works the way it should.

When she told me about being unable to install SP2, I first suspected an invalid license as that is more common. However, that is not the case, all licenses are valid. Instead, SP2 says the install failed because it can't find a registry key.

Additionally, when she signs on using her own credentials, she is unable to download and install yahoo IM client (used as interoffice app), as a matter of fact, when she goes to the yahoo IM website, IE doesn't display the gif's on the page. I reviewed the security settings, all seems to be in order.

I'm stumped...Has anyone seen this before? Any suggestions?

thanks,
Ron