Glen, thank you very much for your help.

At your suggestion, I am listing below the files which the Win95 setup is
unable to find:

Error message when trying to install Win95, quote:

Copying Files.The file 'arp.exe' on Windows 95 CD-ROM could not be found.

Setup could not find a file on the specified path (D:WIN95). If the path
appears below, make sure it is correct. Click OK to try copying again.
(selected Skip File)

Details: The following error occurred: 'The path was not found' (error #3).

Setup could not finish opening a file on the source disk.

'elnk3.dos'

'ftp.exe'

'hosts.sam'

'icmp.dll'

'inetmib.

'imhosts.sam'

'nbtstat.exe'

'netstat.exe'

'ping.exe'

'route.exe'

'rpcltc3.dll'

'rpclts3.dll'

'secur32.dll'

'svrapi.dll'

'telnet.exe'

'telnet.hlp'

'tracert.exe'

'vdhcp.386'

'vip.386'

'vnbt.386'

'vtcp.386'

'vtdi.386'

'winpcfg.exe'

'winsock.dll'

'wsasrv.exe'

'afvxd.vxd'

'elnk3.vxd'

'ndis.vxd'

'ndis2sup.vsd'

'ndishlp.sys'

'networks'

'protman.dos'

'protman.exe'

'protocol'

'services'

'vnetbios.vxd'

'wshtcp.vxd'

'wsock.vsd'

Nels

The two  files you mention are on the Windows CD, inside the .cab files.
I don't know why Windows setup would not be able to find them, as setup
automatically looks inside the .cab files.

The files you mentioned are dial-up and networking files...perhaps if you
list all the missing files, we could better help.

You might try copying the Windows setup files (from the Win98 folder on the
CD) to a folder on the hard drive, and install Windows from that location
instead of directly from the CD.

Also have a look here:

Windows 98 Setup Hangs During File Copy Process
http://support.microsoft.com?kbid=195647

How to Troubleshoot Pre-File Copy Windows 98 Setup Issues
http://support.microsoft.com?kbid=195750