I recently received the “Cannot copy files required for installation” error (with error code 0x80070017) when trying to install Windows 7 on my PC. After some investigation I found that the top 3 reasons this happens are:
1. The DVD you are using is corrupt. If you are burning the ISO image to a DVD, you need to choose the lowest speed and be sure to verify it after burn (I used 4x)
2. Your memory may be playing up. Run a memory test using the free tool from http://www.memtest.org. Any errors reported need to be ironed out. I simply took out 2gb of the 4gb my system had installed and this cleared the error. I then re-inserted the memory when Windows 7 had installed.
3. Reset your BIOS settings to default and make sure you are not aggressively over clocking your system.