Win 8 requires a 64-bit processor, and I believe the 3000 had only 32-bit processors available.. That is what is causing the 05D error.

[http://windows.microsoft.com/en-US/windows-8/system-requirements

Windows 8 does not require a 64-bit processor. Here is a link to the minimum Windows 8 system requirements specified on Microsoft's site:

http://windows.microsoft.com/en-US/windows-8/system-requirements

Note the different minimum RAM and hard disk space requirements for 32-bit and 64-bit versions of Windows 8.

Now that said, I don't know whether Windows 8 will run on your older Dimension 3000. Ars Technica has a good article on "recommended" system requirements for Windows 8 and recommends at least a dual-core processor:

http://arstechnica.com/information-technology/2012/05/recommended-system-requirements-for-windows-8/

Here are a few more links about installing Windows 8 on a computer with an Intel Pentium 4 processor:

http://asia.cnet.com/ask/will-windows-8-run-on-a-computer-with-an-intel-pentium-4-processor-62214801.htm

http://www.eightforums.com/installation-setup/6815-will-windows-8-run-my-pentium-4-pc.html

http://www.sevenforums.com/windows-updates-activation/220314-installing-windows-8-a.html

I did look up the error code that you was given the error code comes back according to Microsoft's tech website it means that the CPU is not compatible as it requires PXE to install windows 8 and the Dell Dimension 3000's CPU does not have that. I did confirm that it does not since i have the same computer and use cpu-z to identify and it does show that the CPU doesn't have those requirements therefore you can only install upto a windows 7

I don't think this response is accurate.  There is both a 32 bit and a 64 bit version of Windows 8.  So Windows 8 does not require a 64 bit processor as this response indicates.

Am I missing something?

The Dimension 3000 shipped with Celeron, P4 and P4 HT processors. The Celeron and early P4 processors are 32-bit, do not have NX,  and will not run Win 8. Intel added 64-bit code to the some of the Prescott and Prescott HT P4s, making them 64-bit. All Prescotts, even those with 32-bit instructions, have the NX type function.

The error code you got indicated an incompatible processor. My D9100 with a P4 630 HT (a Prescott 2M CPU) is 64-bit and runs Win 8.

Run CPU-Z and post what processor you have.

You need a 64-bit CPU to run a 64-bit OS, but a 32-bit OS will run on either 32- or 64-bit CPUs.