Alright I was able to fix the problem, just so if anyone else has issues after a clean install of Windows XP SP2 the problem arises from DEP (Data Execution Prevention) a new feature for XP SP2, Aladdin was nice enough to send me a workaround to get the Dongle Driver install correctly.
Regarding your question, compatibility with SP2:
The workaround is to change the boot.ini by:
1. Open Windows Explorer and go to C:\
2. Choose Folder Options from the Tools menu.
3. In the View tab, uncheck "Hide protected operation system files
(recommended)" and click OK.
4. Now you'll see in C:\ the file 'boot.ini'. Right click on it and choose
Properties. Uncheck the Read-only attribute and click OK.
5. Open the boot.ini file in Notepad and change the "/noexecute=OptIn" to
"/noexecute=AlwaysOff". Save the file.
6. Restart the machine.
7. Install the HASP driver.
8. Open Windows Explorer and go to C:\
9. Choose Folder Options from the Tools menu.
10. In the View tab, check "Hide protected operation system files
(recommended)" and click OK
This shuts off the DEP so the drivers can properly access the hardware and/or registry(I think)...I'm no expert. In any case it works.
Could someone make a admin aware of this post, so other users won't run into this issue when they upgrade to SP2?