Just FYI, this is how I got on with GTA3 cabs - done it for a bit of experimentation.
I downloaded
this version of i6comp. This is not the version that Darksoul posted - Shaman posted this link.
I placed all the files needed including i6comp into the main folder used (whatever folder that is default when you start up Command Prompt - I used XP so it was something like C:\Documents & Settings\User
I then went about replacing the exe using the normal process:
i6comp r data1.cab gta3.exe gta3.exe
I then burned a copy of the disk with these new files (data1.cab, data2.cab and data1.hdr)
It installed and played perfectly with no errors- note I used the v1.1 exe (I first installed this patch to obtain this exe before using the above method).
Using the i6comp that Darksoul posted caused an error just before installation - the .bmp error.
Using the fixed exe on Gamecopyworld for V.1.1 (as I was too lazy to install the patch to get the exe myself) also did not work out.