Error 1311 when installing Office XP

This has been posted before with different office version. Now I get it when trying to add to my office XP instalation.
Same CD, same PC - just to add Excel. I get the error : 1311 source file not found office1.cab.
Obviously the file is there. It happens on a WinXP machine, as well as W98SE. I tried to burn the CD and make the file not hidden - no go.
The only "solution" is what MS KB suggests - copy the CD to the hard disk and install from there. That works, but is that the solution? I have 3 CD players on 2 PCs and non can read from the Office CD??? And how did I install in the first place from the same CD and on the same PC ?
If ANYONE has a REAL idea what is going on - please post

 

Actually it's not a hardware problem. It's a bug in Windows. Here's the fix:
Open regedit and go to:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\WindowsNT\CurrentVersion\Winlogon
Double-click the key allocatecdroms
change the value from 1 to 0. Reboot .

If using XP Pro you can do it also like this:
Run > gpedit.msc
go to: Local Computer Policy\Computer Configuration\Windows
Settings\Security Settings\Local Policies\Security Options
Double-click on "Restrict CD-ROM access to locally logged-on user only" policy, click Disabled
Reboot

By default this key is at 0, for some reason it changes to 1 and causes the error message. The bug is that it happens on a localy loged in user.