Win XP Pro BSD after KB932823-v3

I have a Vostro 1700 dual boot Vista business (origional os) with XP Pro(SP2) on a factory partitioned d-drive. It has worked well for several years. I noticed the need for XP SP3 decided to up date. Windows Update required KB932823-v3 before SP3. Did the update installed SP3 from disk; at reboot  got BSD  it was a oxoooooo6d (could have been e) not the common ...7e stop error.  Since I had "system restore" off (causes problems in dual boot configs or so I understood two years ago when I set this system up) I could not find the problem. I reinstalled XP Pro over the current installation using the slipstreamed disk used for this install( nLite, with all the 'driver packs', XP Pro SP2). With system restore on found "print driver Amyuni Document Converter 2.50" restore point just after KB932823-v3 point, I did NOT install this driver. Thinking 'root kit' I slipstreamed a new cd with just XP Pro SP2, SATA drivers(both ATA/AHCI), and the notebook drivers(I did the long reformat option); then installed all other drivers.  Windows update still required KB932823 before SP3 or IE 7/8. This time the same BSD issues (the "print driver" problem is gone) when restoring to just before the kb932823 point. The 'details' screen says one file was renamed " MSCTF.dll " was renamed " MSCTF(2).dll " in the D:\WINDOWS\system32 folder. The system now functions correctly ; or so it seems.

 I used what is it BSM 1.7 boot loader not sure on the name ;it has been tooo long. I had to use the Vista  dvd to repair boot loader to get Vista to boot.

My question is how do I get around this problem.  Will slipstreaming SP3 into XP before os install work?  I saw another thread suggest installing SP3 while in safe mode to get past another problem; have not tried this yet.