I solved this reported issue on my setup:
I am using one hard drive on my target with 2 partitions and using the boot
menu (boot.ini) to boot back and forth from my XP Pro installation on the
first partition and my XP Embedded image on the second partition. When in my
XP Pro installation and while preparing the 2nd partition for XP Embedded,
Disk Administrator assigned the letter "D" to my new 2nd partition.
I saw this same error, "The instruction at "0x03171C7C" referenced memory at
"0x0000000c"" when FBA was installing components (the instruction location
was different and I don't remember but it is not relevant). After looking at
the "Windows\fba folder\FBAlog.txt" file I noticed that all Windows stuff was
being loaded from C: drive. So, I changed the drive letter from the default
"C" to "D" in my target's "Settings", "Target Device Settings" configuration
in Target Designer. The error went away and FBA completed happily.