My friend also happened to use Partition magic (tragic) to something of this sort. He had the same kind of problem. We couldn't boot into windows xp (he only had one OS), and we couldn't reinstall windows. In the install screen where we have to select the partition to install, if we selected a partition, it would give an error message saying 'cannot install to this partition blah blah blah'.

The strangest thing was, there was a 8 byte partition which manifested itself from nowhere above C drive. We had to delete each partition and then only could we remove that 8byte partition. Only then were we able to install windows.