Have you tried botting in safe mode(Press F8 during boot)? If it will boot in safe mode use System Restore to restore it before your problem. Then I'd run sfc /scannow and then make sure all your updates are installed.
If it won't boot in safe mode how far does it get? Depending on how far it boots, and if there are any errors I'd do the following. Boot w/ the Windows XP CD, go to a recover console, type
chkdsk c: /r
Then reboot, if it still won't boot, even in safe mode, use your Windows XP CD to do a repair install. If that still doesn't work, format and reload!