Microsoft announced today that it will be delaying the release of Windows XP Service Pack 3. Compatibility issues linked between the new service pack and Microsoft Dynamics Retail Management System, a retail chain management application, is cited as the cause.

The code for XP SP3 was only finalized recently. Microsoft had earlier promised an April 29 release to Windows Update and automatic rollouts by June 10, but the recent discoveries of the compatibility issues arouse unexpectedly. The issue is forcing the software giant to delay the release of Windows XP SP3 to Windows Update and Microsoft Download Center. The bug is also said to exist between Windows Vista Service Pack 1 and Microsoft Dynamics RMS, even though Vista SP1 was recently released.

A solution to the issue is currently being tested, but no time frame was provided as to when the testing would be completed. As a provisional fix, Microsoft will put in a place a filter to prevent Windows Update from offering both XP SP3 and Vista SP1 to systems running Microsoft Dynamics RMS. Once the filter is in place, Microsoft plans to release the XP SP3 to Windows Update and Download Center for users not running Dynamics RMS.

To help protect customers, Microsoft warned those running Microsoft Dynamics RMS to not install Windows XP SP3 or Vista SP1. For those inquiring about more information Microsoft reckons that customers should contact customer support.

The last Windows XP service pack was released back in August 2004 and upgraded the security of XP. Windows XP SP3’s main features include networking and security improvement, and compatibility with Windows Vista and Windows Server 2008 security credential providers. SP3 will include previously released updates such as Wi-Fi Protected Access 2, Microsoft Management Console, and Microsoft Windows Imaging Component.

Windows XP SP3 was recently released to the Microsoft Developer Network on April 23, and to OEMs on April 21.