[Xaccers]

If it's a complete fresh install, I normally pick the whole drive as I back all my files up to other computers.
However, if you think once you've finally got it working you might in the future need to do a wipe and reinstall again, take a rough guess as to how much space personal files that you'd want to keep (such as pics, mp3's, videos etc) are likely to be, and subtract that from the 160GB.
So if you recon you're going to need 100GB for personal data, create a partition of 60GB when doing the install, once that's done, in Windows create a second partition and keep all your personal data on there, so if you wipe the system it won't be lost.

Now, how genuine is your install CD?
I've done installs from non-kosher cd's and they've asked for specific files which are named slightly differently in the i386 folder.
Thankfully I had a second cd from a different source, and was able to complete the install by swapping between them.
How clean is it?

If it's a genuine copy and you've just bought it, see about getting an exchange if there are any marks on it.
Could also be your laser needs cleaning.