well when I had XP I got even the beta version of SP3 or whatever version it was and it worked flawlessly. same with my bro he got it and it works fine. would .NET frameworks have to do with anything? are people going from SP1 to SP3? or are they going from SP2 to SP3? because that may be a part of why it isn't working.I mean if it works for some people with no problems and for other with problems then there must be something missing for the people that are having problems there must be viruses or corrupt files or some vital programs that are needed for SP3 to install and/or run correctly. that is if you think about it. Now I'm no computer genius but I'm thinking that it has something to do with the .Net frameworks or something or they're getting corrupt SP3 downloads. But thats just my idea.
Edit: here's something about windows 7
http://www.istartedsomething.com/20080524/windows-7-appearance-d6-conference/