Download and install Windows XP SP3 from here. SP3 contains MSXML, so it'll fix your problem.
If you can't download and install SP3, you can manually download and install MSXML using this link.
If the above solutions don't work for you, do as following:
1. Type regedit in RUN or start menu search box and press Enter. It'll open Registry Editor.
2. Now go to following key:
3. Right-click on win32 key and select Permissions.
4. Now select your username and provide Full Control to it.
5. After that in right-side pane, change value of (Default) to following:
NOTE: Here C: is system drive where Windows is installed in your system. If you have installed Windows in any other drive, change C: to that drive letter.
After following any of above mentioned solutions, re-run Office 2010 setup and now it should work without any problem.