vista install error

I'm trying to reinstall Vista Home Premium 32 bit OS on a Gateway MT3423
laptop (AMD Turion 1.8 X2, 2 GB RAM, Nvidia 6100).

My boot priority is set HDD then DVD drive. That is, when my HDD is
showing in BIOS. If the laptop is restarted for whatever reason, HDD
won't show up until I turn the laptop off and on again.

Once I try using the operating system disc that came with the laptop
(don't have any other one), I format the HDD, the setup copies the
files, then moves on to expanding the files and it gets stuck at around
69% (always). At that point I get "Windows cannot install required
files. The file does not exist. Make sure all files required for
installation are available, and restart the installation. Error code:
0x80070003."

I've read some threads on here, however I was not able to come up with
a solution.

BTW, this is the first time me trying to re-install Vista on this
laptop and first time using this disc. Disc doesn't look damaged, and it
was kept in a dry, cool place.

I've also tried using friends disc (original Vista, not recovery), but
I get the same error.

Any help would be greatly appreciated.