In an embarrassing turn of events, Microsoft has pulled off the distribution of the long-awaited Windows XP Service Pack 3. The company explained in a statement that the discovery of a compatibility issue between Service Pack 3 and Microsoft Dynamics Retail Management System (RMS).

Microsoft said that Windows Vista Service Pack 1 is affected as well and it temporarily halted its distribution.

In a statement released to the several media outlets and on the TechNet forum, Microsoft say it is working on a solution to solve the problem. The company intends to put in place a filtering system that will block the delivery of the updates to the systems that are running Microsoft Dynamics Retail Management System.

‘Once filtering is in place, we expect to release Windows XP SP3 to the web,’ noted Chris Keroack, Release Manager at Microsoft.  

Although it seems like the compatibility issue is affecting only the clients that are running Microsoft Dynamics RMS, the company advised all its customers to not install the Service Packs until a patch will be issued.

Windows XP SP3 is the last update provided by Microsoft for its Windows XP operating system, which will be discontinued on June 30, as the company previously announced.

However, due to the high demand from the clients, several PC makers (Dell, Lenovo, HP) are determined to selling computers with Windows XP after this date.

If other computer makers will join this initiative, Microsoft should consider to extend the availability of Windows XP.

Last week, during an event held in Belgium, Steve Ballmer, Microsoft CEO, said that the company might consider continuing to sell Windows XP. Officially, Microsoft denied any intention to do so.