try restarting them pc taping f8 on boot and choosing safe mode... you may get in a bit further.
(btw you will be able to get system restore to work from a "run" box but is a complicated command can be worked out eaisly by looking at the shortcut in the start menu but will need to look at xp machine to get it...)
you may be able to get the run box by pressing windows key and r
(may also find windows key and pause/break is a usefull one if it works)
also you can boot off the xp cd and run a "second level" repair (choose windows set up and should say which veriosn of window do you wish to repair...)