SQL 2005 and management studio tool cannot be installed on XP with SP3 applied.
Problem: MSXML 6.0 sp2 backward compatibility issue.
Error: Product: MSXML 6 Service Pack 2 (KB954459) -- Configuration failed.
1. uninstall msxml 6.0 sp2. If cannot, remove its entry in Registry.
2. Before removing it from Registry, do a backup first.
3. SQL 2005 should be able to be installed successfully.
4. patch SQL to the latest SP.
5. install MSXML 6.0 SP2.
Also refer to the following post: