Anything is possible, I suppose, but I don`t think any of my restore points were infected and there were no quarantined items in Avast! at the time of SP3 installation.
I always have Avast! running, of course, but also Windows Defender, SpywareBlaster and on-demand scanning from SpyBot S&D, and A-Squared plus a very healthy suspicion of downloading anything that looks even slightly dodgy.
Before installing SP3 I ran Eusing Registry cleaner (again), Ccleaner ( but not the advanced options), Ashampoo drive cleaner option (to get rid of the AOL junk that seems to pile up alarmingly), and did a system defrag using XP`s own tool.
The only thing unusual about the download and installation was that something else arrived first: an update for Widows Automatic Update, which I assumed would be useful for installing SP3 or perhaps updating it afterwards.
In any case, the installation went smoothly (EULA and Installation Wizard) and no error message objecting to Avast! or anything else, and it`s now running fine ... even made an automatic restore point yesterday having been left inactive for 20 minutes.
It`s just this removal of all previous restore points that I don`t understand and the absence of any information about why and in what circumstances this can occur.