John Willemse of Badkey Corner posted that Microsoft has released Service Pack 3 for Windows XP. I downloaded the file and installed the service pack on a virtual machine. Worked without problems …

Then I decided to install SP3 on my laptop. The Installation stuck with a hint that the product key is going to be verified. … After one hour still no progress. And, YES, I do have a valid product key!

I googled and found a hint that the same problem has been encountered with SP 2 already.
To avoid checking of product key do the following steps:

• Extract the exe file with windowsxp-kb936929-sp3-x86-deu.exe -x
• Start the update from the commandline with …\sp2\i386\update\update.exe -o

Now the installation completes.