Hi all, I finally got this installed. Sorry it took so long to respond. The answer was quite simple. First, MSDE 2000 can not be run by double clicking on the Setup icon. It must be run from a command prompt or Run command from the Start Menu. Second, you must give it a valid password.
Here's what I used:
C:\sql2ksp3\MSDE\setup.exe SAPWD=mypassword
With that it installed fine.
Also, anyone attempting this must know that you must remove any older version of SQL Desktop before installing a new version.
Thanks again for your help.
E