After googling for a while, I manage to figure out the solution to the issue.
The hex values of the "CSDVersion" subkeys to the following registry keys need to be changed from "300" to "100":
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Windows
HKEY_LOCAL_MACHINE\SYSTEM\ControlSet001\Control\Windows
HKEY_LOCAL_MACHINE\SYSTEM\ControlSet003\Control\Windows
Hex value of "100" indicates "Service Pack 1", "200" is "Service Pack 2", "300" is "Service Pack 3", so on and so forth. After the system "reverting" to Service Pack 1, Service Pack 2 will install without a glitch.
Hope this work for you too.