Error # 1802 using Product Recovery on R40

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I am trying to format a new hard drive and use it on my R40. I get as far as 29% or 59% data loaded and I get an "Error#1802 Image file is invalid or corrupted" and the computer will go no further. How do I eliminate this error. I called IBM and they told me to remove the Mini PCI card which I did but , No Luck. Also I keep reading about making the recovery discs from my R40 but cannot figure out how. I would like to use my own since my Windows XP has SP2 and all the updates and the IBM version does not have it. I am an intermediate computer user.