I had that problem when I originally installed version 3. After spending way too much time trying to fix the problem, I went back to version 2.5 which worked perfectly fine. With the version 3.xxxx that just came out last week, I uninstalled version 2.5 and had to temporarily turn off my internet protection suite (firewall, antivirus) in order to get the install to work. Now it all works perfectly fine. By the way, I'm running Windows XP too.
If you do some searching there are several threads that talk about various solutions to getting the Sony library software to run on your computer. The topic was thoroughly discussed when the original version 3 came out and many had problems installing and running the program.