On versions of XPe toolkit (database) prior to FP2007 update there was a problem related to version info that gets set in the system registry hive and gets returned by APIs like GetVersion[Ex]. Some applications code or application installation scripts make queries for the system version info to either visualize it to end user, change install path or setup or change the application logic if not quit automatically on unsupported OSes.
Obviously, if the version info is set incorrect those application will fail or won't work as expected (as tested on regular XP Pro with the same SP level installed).
The system version is stored in the CSDVersion string registry value under [HKLM\SYSTEM\CurrentControlSet\Control\Windows] key. You can easy find out what the permitted values are but instead just simply match whatever you've got on the same level SP XP Pro machine under the same key.
Some of the right values I mentioned in this thread.