TooMuchFreeTime, I have tried your preset on the XP SP1 and it didn't fail. Also tried adding read-only attributes on files, still worked. That BITS service notion is only one that makes sense, if you disable something or remove a needed component for those which are left it may hang there. I believe that your problem is real but it's not easily reproduceable, and why do you use SP1 in the first place, try slipstreaming SP2 first, then configure. If anyone else has anything to add please do. Also I noticed that those with unexplained hanging do something extra, like scripts or AIO...if there wasn't a notion that 1.3.5 works I wouldn't even test this. So try to explain to me exactly how to reproduce it, or you do it, first start the test on the clean installation files and don't do anything extra to it.