Error message when you try to upgrade a Windows XP-based computer to Windows Vista: “Windows installation encountered an error and cannot continue.”
When you try to upgrade a Windows XP-based computer to Windows Vista, you may receive the following error message during the upgrade process:
Windows installation encountered an error and cannot continue. Your computer will now restart, and your previous version of Windows will be restored.
When you click OK, Setup restores Windows XP on the computer.
Additionally, an “Error 112″ message may have been logged in the Setupact.log file during the upgrade process. This log file is located in the %SystemRoot%\Panther folder. This “Error 112″ message indicates that the volume is out of disk space.
For more information on this issue, including potential causes, workarounds, and resolutions, see: Microsoft KB Article KB954376.