If you're getting that "Modify? Repair? Remove?" page, then your XP definately still thinks that the VFR is still installed
Best bet might be to go into your FOLDERS and locate the actual folder with the VFR stuff in, and physically delete it... you might find that only a 'skeleton' folder has been left, but this may be what is confusing XP, so you can try deleting it. (Restart your PC before trying to install again).
When I installed VFR Scenery, FS2004 recognised it automatically, and the scenery was there as soon as I took off within the UK... so I don't know why your FS is not recognising it....
When you get it re-installed again, Create a flight and when you are are setting up your Airport / Departure point, click on the "Add-on Scenery" button at the bottom right hand side of the screen, to see of you can see and select the VFR scenery from there.
Incidentally, I removed VFR Photographic Scenery and exchanged it for something else as the 'loading' time (the time that it takes to render each part of the new scenery) was far too long and the sim lost a lot of the realism.... also the location of Airports wasn't naturally compatible with the photo scenery, so the FS airports would just appear in the middle of (irrelevent) scenery. Lastly, the scenery only looked good (once it had loaded!) at a cetain altitude (about 3000 feet I think), anything lower and it looked quite awful. Sorry, I'm not meaning to put a downer on this for you (

), it's just so you can be aware and look out for these problems - hopefully you'll get better results.
Hope this helps Fred.
David.
i7 2600k, 8GB DDR3 RAM, HD 5770 1GB, Win 7 64bit