Sounds like you have a bad Win2k install. One way or another.
I ended up just downloading the network SP2 (100meg +), and making a win2k cdrom with SP2 already integrated. You have to copy the install disk to hard drive, use the network install to patch a 'network image', and burn it back to cdrom using a Win2k boot sector image so that's it a bootable cdrom.
Totally rules too. Soon as SP3 comes out, I'll do the same with it.