Recently, I reinstalled windows 2000 pro (didn't use xp b/c it's just a bloated version of it) and when I tried to install service pack 4, I got this error... I eventually closed AVG and still got the same error. Apparently, something is using that file...
Try restarting your computer then installing it right after you long in, that is usually a good fix when you get errors about things being in use, if not try installing in safe mode.