I just stumbled upon this same error message on a client's machine, did some googling and now I'm here. I found some Microsoft kb-site, which stated this isn't even a fault, just a random error...
I just ran chkdsk /r from the Recovery Console on the installation disk and it did the job. Then just for sure I'll run a hard disk diagnostic program, available free from most manufacturer's websites. I use
the Ultimate Boot CD which contains all of them, available as ISO for burning a CD.
AFAIK torrenting a Windows installation media is not illegitimate as long as it doesn't contain any installation codes. Same goes for copying an installation cd. Actually MS even recommends making a copy of the original for frequent use, like multiple reinstalls or recovery console use.
And cblanck, sorry for your loss. This tip comes a bit late, but maybe someone can find help from this: As previously told, getting photos and other important files from a non-working computer can quite easily be done by installing the hard disk to a working machine. On desktops it's easiest, just connect the other disk with a SATA or IDE cable and plug in a power cord from the psu. A USB to SATA/IDE cable is even easier and works with all disks making them work as an external hard disk. Also there are montage kits for laptop size disks to be fitted into a desktop. All are quite inexpensive. And in any case correct jumpering is important for it to work.
If the hard disk in question is unreadable - because of password protected user profile or even faulty - using a bootable Live Linux CD like Ubuntu or Knoppix can help. They can bypass all Windows passwords by default and even contain a cd burner, although for burning you have to have two cd-players on the computer.
Hope this helps.