Windows 2008R2 32bit OS install Pegs CPU

[ArrowSIVAC]

Host System:

IBM HS21XM Blade 1xQC 2.2Ghz CPU

16GB RAM

ESX 3.5U4

SAN boot with 2TB SAN VMFS0 off SVC Cluster

*****

System, reguardless of blade (nodes in ESX 3.5U4 cluster) when we attempt to install Windows 2008 32bit, pegs the CPU to 100% then locks the VM / system.

This happens at various OS installation stages of Windows (pre-GUI screen, initial GUI screen, and up to "install now" button option)

Any Ideas?

VM Details: (see attached and log file)

[danm66]

R2 isn't supported until Update 5 of ESX 3.5 . http://www.vmware.com/support/vi3/doc/vi3_esx35u5_rel_notes.html#whatsnew

I've seen very squirrely behavior on R2 with previous releases of 3.5