you may have "tested" the CD but that proves nothing
You really should try another CD.
Your problem is quite simply that either the machine cannot read the CD
OR it cannot overwrite the sector on the hard drive where the current version of that file resides. Possibly because its virused, possibly because that part of the hard drive is bad / corrupt
Reformatting and doing a clean installation may fix it. As may forcing deletion of the existing copy of the file (e.e with Unlocker)
However, the most likely problem is with the CD