I had same problem with a Seagate Barracuda II 30GB 7200rpm Drive. No matter how I set it in the BIOS, SME 5.6 caused this error. However, I did note that upgrading from 5.5 to 5.6 did not result in the error. Because I wanted a fresh install, I replaced with a Quantum 3GB drive, and no problems !!
So essentially, I went from a faily new whizz bang drive to an old clunker and it worked. Go figure ............