Right click My Computer Icon located in the start menu or might be right on the desktop, once My Computer opens at the bottom click properties, when that window opens tell me what it says for System it should say XP SP?

Let us know what it says?

To upgrade to xp sp3, microsoft says you dont need sp1... if sp2 is already installed.
You might want to disable your Malware Anti-Malware (and stop it from starting if you know how, followed by a windows restart) & then install and update Malwarebyes and do a full scan with it.

It says windows XP version 2002 SP 2. And, no, I don't know how to disable MAM. Do I uninstall it?

You need to try and disable your Anti Virus program, not Malwarebytes.

What is the name of your Anti virus, Avast, AVG,or Norton???

Malware Anti-malware .. is it this?

Sorry for the shortcut. I have Malwaresbytes' Antimalware; couldn't find any of those programs in the list from the link mikie gave. I'm running AVG Free 9.0 but I thought it wasn't running all the time anymore.

How to disable AVG 9. See link for that.

Once that is disabled, try to install service pack 3 again.

If you have the service pack 3 Installer, set up file, on the desktop, then you could boot to safe mode and double click that service pack 3 installer. Just had to do this with someone. Last week we had to go to an up-date specialist to get one for Vista, so be aware service packs can be a pain in some cases.

Here is a link that might be useful: disable-avg-9-antivirus

FYI:

XP SP3 install cancelled

There's a few reasons that can happen too, do a quick Google search XP SP3 install cancelled

Lets hope it installs after disabling AVG9.

Good luck.

OK, I will disable AVG 9 and try to install SP3 in safe mode. I created a shortcut on my desktop to the MS updates site and start up in safe mode to install. If it doesn't, then will do a Google search. I hope the answer is simple. I think I only do simple things on this computer but it does seem to get ahead of me.

I highly suggest instead of trying to do it through auto updates you go to the actual page where you can download sp3 to your pc then start your pc in safe mode or with all your antivirus and firewalls disabled try to do the install of the sp3 file you downloaded. You should do a search here for sp3, there were many threads about it and the problems installing it.
Service Pack 3
that is where to get the sp3 download file, it is the one everyone uses do not be put off by it saying it is for It professionals. For those that have problems using the auto update this is the one they suggest you use. Once you save the program to your desktop or where ever you save it then disconnect from the internet, turn off your antivirus program as zep instructed and turn off your firewall by going to your control panel and the security center and turning it to off. When you have done that then go to the install file and double click it to begin the install. Once done and rebooted you can turn everything back on.

I disabled AVG, started up in safe mode to try to download SP3 but not able. I got the red X saying the website has encountered a problem and cannot be displayed. I tried every which way, finally started up out of safe mode and was able to download SP3. There was a lot of info under safe mode but no download option. Anyway, SP3 is now up and running and it looks like everything looks untouched. I enabled AVG and it's running a scan (automatically), how about that. IE8 is still on hold. I think I'll save that for another day just to see what trouble I get into after today. None I hope. Thank you for your support. You know, I don't think you all are appreciated enough. Hope everyone has a chance to take time off and just kick back. Happy Holidays and Merry Christmas. Gee, is it too late to do Christmas shopping?

Very good.