What version of DS? What OS version? XP SP2, XP SP3?
This was experienced with the the D series as well and there was a hotfix for XP SP2. XP SP3 already includes it.
My SP2 image worked because I had the hotfix in the image, but I've rebuilt with SP3 and it, too, works as expected.
Here is the article:
Windows XP Setup program may stop responding during video driver installation
Hope it helps.
Jen