Is reinstalling an option Freeon? I haven't much experience with XP, but I think you can reinstall the OS without formatting your drive - if that doesn't work, you can always use more drastic methods later.

For now, get a hold of a bootable XP installation disk and insert that into the laptop. Make sure that in BIOS, under "boot sequence" (or something like that) CDROM before HDD, and reboot. After boot, an installer should pop up...

Good luck!