Try, try, try and try again.
I had this problem a few minutes ago on my iMac but it seems to have fixed itself?
I tried the following:
Open Bootcamp Assistant, partition the drive as you wish (i had 55GB for XP Partition)
Let it partition.
Insert your XP Install CD
Let the system reboot and wait for the CD to be launched.
Wait until windows loads all the nessecary data to launch the setup.
Select the drive labeled <BOOTCAMP> <FAT32>
Then select Format as NTFS (I selected "Format as NTFS (Quick) )
Press F to confirm you wish to format.
Let the drive format.
The file copy proccess now begins...
Grab a tea/coffee and some biscuits and watch some TV
When the proccess is done your computer will reboot, TOUCH NOTHING! Let the CD launch again, only this time the system will say "Press any key to boot from CD..." DONT DO THAT! Let is dissapear.
--This is where my problems began, i would get the hal.dll error, so i tried all the stuff above again, and again, burning new CD's.... and now it just went away? And is continuing the installation. Which is odd, maybe my system was having some sorta glitch during the install that hasnt happened again. So a obvious tip here, if it didnt work the first time, try and try again. Good luck!