Same problem here. XP Pro, SP2, Xable's update, DX9c addon. Narrowed it down to something removed in the OS options or network sections, or perhaps WMP (gave up once I found out it works fine in 1.3). BTW, the first time I encountered this, it installed in VirtualPC - though "Saving Settings" took about 20 minutes - but sat there forever when I tried to install it for real...