This the most frustrating error message here on Office 2003 installation.
See this figure below:
This error occurred while installing Office 2003 package with Office 2003 Service Pack 3 integrated on Windows XP professional with Service pack 3 build 3244 integrated. In both the packages the service packs are integrated with the installation file. Note: Please note that Windows Service Pack 3 comes with Windows Installer 3.1(KB893803), so no need to install it before installing Office.
[See here for office/windows service pack integration methods.]
Cannot install this office package with this Windows version. (XP SP3 build 3244)
This office package is installing successfully on other windows versions i.e. XP sp2, Windows 2003 versions etc.
See the solution section section to see the solution.