If you put system restore into the Search Forum box you will get lots of advice on repairing/restoring system restore BUT you have to accept that all previous points will be, or are already, lost.
The most popular repair is to switch off system restore, reboot then switch it on again. If that fails, and it did for me, the best bet is to re-install system restore as follows:-
Go to Start - Run and type %Windir%\INF then press enter.
In Windows Explorer go to Tools - Folder Options - View Tab and uncheck “Hide extensions for known file types”.
Find the sr.inf file, right click on it and select Install.
If the Files Needed dialog box appears, click Browse and point to the i386 folder on the Windows XP CD or to the i386 folder on the hard drive, if it exists, or for systems updated with the Service Pack 2 CD or Download from Microsoft, browse to the C:\Windows\ServicePackFiles\ folder.