SP 2 CANNOT START SYSTEM AFTER LOADING.

Not yet.

The problem might have been caused by
1. Incompatibility of the motherboard (BIOS) and SP2,
2. One or more software that are not compatible to SP2, or
3. Spyware.

HP website does not list any newer BIOS for Windows XP than the one in Sept, 2001.

The best approach is to
1. Uninstall SP2,
2. Make sure all your software are SP2 compatible by updating, upgrading, or patching,
3. Remove all spyware, and
4. Call HP tech support if there is any issue that needs to be resolved before trying to install SP2 again.

Uninstallation of SP2 is very straight forward and simple. The only problem is you need to boot the computer to Recovery Console from Windows XP CD. I am not sure whether HP recovery or restore CD would allow booting computer to Recovery Console. Unless you have a Windows XP CD, you need to borrow one. Consult HP Tech Support on this issue.

Once SP2 is uninstalled, you should be able to boot to Windows. You need to install all MS critical updates again.

Read the following references and add a comment if you need help or more information.

References:

1. http://tinyurl.com/5k9mx or ?How to remove Windows XP Service Pack 2 from your computer?
2. http://tinyurl.com/4swqq or ?HP and Compaq Desktop PCs - Important Information for Upgrading to Microsoft Windows XP Service Pack 2?
3. http://tinyurl.com/53w5n or ?How to help protect your computer if you decide to remove Windows XP Service Pack 2?
4. http://tinyurl.com/44gxg or ?Programs that are known to experience a loss of functionality when they run on a Windows XP Service Pack 2-based computer?
5. http://tinyurl.com/5oog3 or ?Some programs seem to stop working after you install Windows XP Service Pack 2?
6. http://tinyurl.com/4ct56 or ?Device drivers known to cause instability in Windows XP Service Pack 2?

If you do not want to go through all these, back up your data and clean install Windows.