A quick search shows your error to be a fairly uncommon Installshield error that no one seems to know the exact cause of... A couple of possible solutions folks had listed:
Try running the installer in compatibility mode for 98/ME.
One person claims to have gotten this error installing a Radeon 8500, and was able to solve it by doing the following:
1. Start XP in Safe Mode by holding F8 key at boot start.
2. Disable "Radeon 8500" driver in Device Manager. Do not re-start.
3. From Add/Remove programs, uninstall ATI Video Drivers. Do not re-start.
4. Open C:\Windows\System32 and delete ATI*.*. There is a Ati???.dll that
is causing problem as cannot be deleted normally.
5. Try "Setup" for 3286 drivers but will still fail.
6. At Device Manager, select Radeon 8500 and select "Update Driver".
7. Select "Install from list or specific location".
8. Select "Don't search, I will select driver to install"
9. Pick Radeon 8500/Radeon 8500LE (Not Radeon 8500).
10. Celebrate!!
I'd add that in addition to using the ATI uninstaller in add/remove programs, I'd also download and run the Cat Uninstaller program from ATI's website as part of the uninstallation process.
You might try contacting Andy at Ultimarc to download a fresh copy of the drivers... It's possible (though unlikely) you may have gotten a bad CD.
If all else fails, you can always format and reinstall...
