If it's a fresh install of Windows XP, did you install SP2 (or SP3)? How about all the critical necessary updates? .NET 1.X, 2.X, 3.X?
If so, then the final step would be to update your MSI installer. That error is related to the MSI installer...it's telling you that your MSI installer is too old for the version that the MSI file you are trying to install was created with.
The following link *should* be the newest version of Microsoft's MSI installer:
http://support.microsoft.com/kb/942288/
After that's installed (and you've restarted your computer), issue the following commands from a command prompt (ie, Click Start > Run > CMD):
MSIExec /unregister
MSIExec /regserver
Restart your machine one more time after it completes the above steps, and then retry to install Decal. Hopefully that helps ya out.
Edit : Typos