I have solution that does NOT involve multiple COPYING and PASTING.
I ran into this issue with a fresh reinstall of XP w/SP3 on a desktop. During the early stages of the XP setup the message for needing the ASMS file popped up. At this point I was unable to continue even after trying d:\i386, x:\i386, etc... I read that this issue is related to the XP setup not recognizing the CD/DVD drive properly.
So, welcome UBUNTU! I have a newly created UBUNTU 9.1 live CD boot disk. Let me first say that I am not at all a Linux expert. I'm a Linux newbie. You don''t have to be an expert. Immediately after I received the ASMS error I put the live CD in the CD drive of the desktop and rebooted to the live CD. UBUNTU will recognize devices such as USB flash drives. This is important for this solution to work. While the PC was booting to the live CD I went to a laptop of mine and copied the XP w/SP3 CD to a flash (USB) drive (c:\win dir.). Then I brought the flash drive to my problem desktop. Plugged the flash drive in and UBUNTU recognized the flash drive. I copied the "c:\win" directory from my flash drive to the desktop. I then rebooted the desktop and guess what? I didn't even I to type a path for ASMS. The XP setup automagically continued. Oh, if by chance the XP setup does not continue I recommend typing c:\win\i386 (or whatever directory that you copied your XP cd to).
This setup process not only continued but was probably faster since XP was able to find any additional setup files on its hard drive.
Hope this helps someone get past the ASMS and CD/DVD issue.