I am having the exact same problem. I need to use VB for my college class, yet I cannot get passed the installer as it keeps saying I need Windows XP SP2 (I'm using Vista Home Premium, by the way).
If I restart into Safe Mode, I can get the installer to work up to a point, but then it says it needs the BITS service running. And this service apparently will not run in Safe Mode.
If anyone can tell me how to get Background Information Transfer Service (BITS) to work in Safe Mode, it might get the installer to finish.
Heck, if anyone can tell me how to get the installer to work without reverting to Safe Mode, that'd be great too.