5728 will not upgrade from 5600

I have a clean install of 5600 x86 on it's own drive, it's running well, not
many problems. There's no dual boot menu so XP is not involved at all.

When I try and run an upgrade it fails at "expanding files". The error
message is:
" Windows could not prepare the computer to boot into the next phase of
installation. To install Windows, restart the installation.
The upgrade has been cancelled."

Then it tries to roll back the install files and I get:
"Unable to delete C:\$WINDOWS.~BT
Error code 0x80070020"

I have to go into XP to delete that directory, along with two others, or
else when I try and boot into 5600 it takes me back to setup.

I reported this to MS, is there anything I can try to resolve this or
identify the problem? I know that I could go with a new install, but I did
want to do the upgrade after reading comments in the group.

Ray