Alright! Found the culprit!

In this topic:
viewtopic.php?f=49&t=206
The provided .reg file that sets up the env variables, has all the paths with double backslashes, I edited the Environment Variables manually and removed all the duplicated backslashes, and it worked, the file there should be ...

Thanks for the reply, how do I verify permissions for the temp folders?

I have applied Full permissions to "Everyone", including Auditing permissions, and defined the owner of the folders as "Administrators".

Still getting the same error.

Hello, I've made a Virtual Machine with WinXP in order to run Psy-Q, I have followed the following tutorials:

https://www.psxdev.net/help/psyq_install.html

For setting up the environment I used the automatic method for WinXP present here:

https://www.psxdev.net/forum/viewtopic.php?f=49&t=206

And ...