Setup has found that drive c is corrupt. Setup cannot continue... F3...

Hey fellas...

I have a 3 partition (C, D and E) 60GB HD. I am booting
from the WinXP CD to install it on drive D: which is FAT
also, but it still won't take. It goes through loading the
device drivers (the 1st blue screen) and all that, and I
tell it where to install, and a few seconds later I get
THIS error: "Setup has found that drive c is corrupt.
Setup cannot continue. Press F3 to exit." I ran Scandisk
(and did surface tests on ALL the partitions too).

I have no clue as to what is "corrupt". W98 is on drive C,
and is the primary OS. NAV is disabled too. Am I doing
something wrong here? I'd appreciate your input. I'm going
to try formatting drive D: - I can't format C: again...
obviously. What program or file could it be on drive C:
that is causing this problem?

Thanks,
Rich