I had the same problem. Looked into it and was told that my problem was probably with iPhotos syncing with my iPod. Disabled iPhoto syncing and error disapeared. Was a little bummed about trying to figure out what picture was corrupt, as I have around 2000. So I renamed IPod Photo Cache directory, just as a wild guess. Re-enabled photo syncing and iTunes took a few minutes to recreate all iPod sized photos, but finished without an error. I'm not sure where that directory would be on an XP machine, but you might want to try that first.