mindstorms nxt unable to install package on windows

I jut received mindstorms nxt for windows.  I tryed installing the
package on windows xp home edition.  It would not install because I did
not have high enough screen resolution and I did not have service pack
2 for windows and I did not have bluetooth(optional).  I was able to
install the software by doubleclicking on the setup.exe in the cd
directory.
Do I really need the resolution and do I really need service pack 2?
I tryed installing service pack 2 but was not able to complete the
process as windows never completed installing it (or never started to
install it-I still have service pack 1)
Mary