When I try to run XP Home setup with the multi-boot dvd it gives the following error just after the first reboot: and you have to quit the setup process, any ideas?

OhMy, this is my very favourite bug which i had some times in cheap dvd drives like ones in gericom notebooks or so. ASMS is not a file, but a directory, but windows setup thinks, it's a file. Very strange bug, but try it on another pc with a different drive...

Unfortunately i'm running it on Virtual PC/VM Ware (it doesn't even allow me to type anything, seems like keboard is not responding) with an ISO file, so I think the media is not an issue this time

yes, i also DONT understand this friggin error.