I get the following error during install...

Setup cannot copy the file atapi.sys.

Ensure that the location specified below is correct, or change it and insert "Windows XP System Files" in the drive you specify.

Any ideas on what may be causing this?

try slipstreaming sp2 on a clean source.. not 1 with sp1 slipstreamed

also try looking on http://microsoft.com for more info & maybe a fix if solution #1 doesnt help

it shouldnt matter if you have sp1 slipstreamed already, what about all the ppl that have source cd's that have sp1 already right out of the box? i have a feeling the problem lies in what have been done to the source otherwise, have you used nLite or anything like that b4 or after you slipstreamed sp2?

Disable virtual cd applications such as Daemon Tools or Alcohol 120%, its locking atapi.sys during your SP2 installation.