OK, the problem of Modem not getting installed is solved. This is what I did:
Used the repair option after booting from XP CD. All went normal, but while installing, restart ended in BSOD.
Error: SCSIPORT.SYS, address: FT3A6F79, Base at: F739B000, Datestamp: 41107b4b
I was able to get past this by selecting debugging mode and repair completed. But Debugging mode was not very useful and BSOD reappeared little later during booting. It was starting normal in safe mode, in which tried to install Modem and it got installed as normal.
Finally decided to install the XP again after formatting hard drive. This installation was trouble free, no more blue screens, and modem working normal. This also resolved the Bluetooth modem issue.
Thanks for the help guys
Sorry about the wide screen, which is due to setup log posted in my reply # 20.
jawanda56