Unti someone who knows more about this try the following, it will not harm your settings or program.
Re-boot and tap the Del key to enter safe mode options, select, safe mode with networking. And try to gain access to your sys restore point from there.
Right click on your "My Computer" Icon, choose hardware tab then system restore and you will be able to undo the restore you have just done. This will take it back to how it was prior to using sys restore.
If not, borrow a copy of XP disk and run a repair option from the disk. For future use, once you have a working system, make a back-up disk of your i386 folder, this will act as a full XP disk for any future problems you may have.
Powerless has done a very good guide on how to do this at his simplyguides site, click here.