Symptoms

During the installation of a device (hardware, or a software emulation driver, such as OpenVPN's TAP-Win32 driver), you get the following message:

Quote

The system cannot find the file specified.

After that, it goes into a hardware detection loop, meaning it finds and tries to install the same hardware again and again until the cows come home.

Resolution

Windows 2000 and XP has a bug that it cannot properly install drivers using INF-files, when the RunOnce registry key is missing from the following location:

HKEY_LOCAL_MACHIN\SOFTWARE\Microsoft\Windows\CurrentVersion

This key is often used by installers to execute post-reboot scripts and programs, but when these run, they sometimes inadvertently delete this key, causing all the mayhem you're having now.
Simply recreating this key, does the trick:

1. Click Start, then Run, and type in regedit, and click OK
2. Navigate to the key: HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion
3. Right-click on CurrentVersion, and choose New key
4. Type in RunOnce, and click OK

Now that the key exists, installation of hardware should function normally, and the infinite detection loop should end.