As much a sit pains me, i have to ask the obvious...
Did you uninstall FFXi AND clear your registry of any remaining crap leftover, if any before the reinstall?
If no, uninstall and clear registry, then try again.
If yes (you're gonna hate me here), uninstall, open up msconfig and shut down EVERYTHING in your startup section. That includes your software firewalls, scanners, ect.
-reboot-
verify that nothing but windows started.
now try to reinstall, and see what it gives you.
If it works, {Congratulations}
if no. . . i'd consider running a scandisk (the LONG one), or whatever your HDD software of choice is. maybe your drive is going bad.
Out of curiosity, what installation disk set are you using, and where are you seeing this error?
Disk set 1 = 1 POL disk, 2 FFXI disks and 1 Zilart disk
disk set 2 = 1 DVD with everything on it including Zilart and Promathia.