Windows XP couldn’t start because the following file is missing or Corrupt:

Improper shutdown probably casued this, but Windows will not start…getting “Windows XP couldn’t start because the following file is missing or Corrupt: \windows\system32\config\system” I know I need to use recovery console to fix, but here’s the issue..it won’t get to that point. Win XP Cd, boots to it and I get the normal Windows startup blue screen with “Windows setup” at the top left but it just hangs there for hours. I have data on this drive that is needed. I’ve created a boot disk and the PC boots to it but it doesn’t recognise the C: or D: drives as being there. I’m Stuck. Any ideas to try next without data loss would be GREATLY appreciated!