Line 1 is [Data].. hmmm. I don't know if its XP Setup being stupid, but I don't see anything wrong with that line. But try the following: Add ;SetupMgrTag before [Data] Most of the winnt.sif files created out of Setup Manager includes that line. I know its a comment, but try adding it anyway. Also, do what Terminator3 said about replacing $OEM$\$1\install\batch.bat with %systemdrive%\install\batch.bat