Im having this same problem installing XP Pro SP3...:confused:
The keyboard and mouse work perfectly throughout the light blue install screens/partition screens, and while booting up, but at about the same time mark during the install, 33-34 mins, really @ the Regional and Language Settings menu the keyboard and mouse lights go off, and stop responding...
Check the usb settings in the BIOS.
Problem solved =)
Sat over here in Sweden and tried to install a gaming optimized stripped version of XP x86 SP3, 350MB lol xD
Ran into the exactly identical issue like you; USB Keyboard and mouse working like a charm during XP partitioning and the file transfer phase; after first boot, however, and the installation launches where u see the countdown timer for installation time left and such, the power to the keyboard and mouse go out. Well I got pretty pissed, had no adapter for USB-PS2 here at my gf, 110km away from home. And of course no PS/2 mice/keyboard.
Reformated, didn't help even a little ****.
Started looking around for a solution, and couldn't find anyone, this forum hadn't anyone at least =)
I were away from my stationary computer for about 10-15 minutes (while the XP installation was on) and thought that I should reboot my comp and go into BIOS to look around for some handy USB support options.
Were quite surprised to notice that the mice and keyboard all of a sudden had started to work o.O' Weird. Well, I guess it should work for you too, if you haven't been able to borrow PS/2 stuff yet ;) Always fun to report "solved" issues ;)
EDIT: Had to reinstall XP again since the drive letters were messed up; this time it didn't work to wait for USB devices to "wake". However, if I moved the mouse around, and pressed some buttons on keyboard right when the XP installation starts after first reboot, they didn't die on me.
EDIT no2: I actually had to hard reboot the tin can after it wants to input user name; only after that will the mouse pointer show up on entry of installation, and u can move around the pointer. Hope someone understands me xD
Another possibility would be to get something like nLite and create an unattended setup CD.
With an unattended setup you wouldn't need the mouse and keyboard?