I don't see you mention what build of Windows you are using, I'd upgrade whichever one to the latest service pack.
I'd recommend getting trial version of TuneUp Utilities, and see if it finds any problems.
Demos refusing to install is a windows problem, likely some file in your windows is incompatible.
I'd look for newer Windows Installer, it's at least up to 3.0 now at least.
Search for this: WindowsXP-KB942288-v3-x86.exe
Whoever makes your motherboard I would go get the latest firmware and utilities, specific to it, if you aren't sure: cpuid.com and get their free utilities.