This is due to the installation of MS's Windows Updates, specifically (in this case) Service Pack 1 for XP (I've also read reports of Service Pack for IE causing a similar problem). MS's technical support line (US 1-800-936-4900) will provide free technical assistance in correcting the problem IF you have your Windows XP recovery CD (usually you get this with a new computer). Of course, you are going to have to insist on getting support from MS for the problem, because MS typically attempts to refer you back to the computer manufacturer who is contractually obligated to provide support for all preloaded software, Windows included. However, as this is a problem caused by a MS update to Win XP and not by the original software installation, MS is totally responsible - and I demanded that they assist with resolution of the problem. I did some research on the 'net (using my old 75 MHz Pentium and a 28.8 dialup, ugh!) and what appears to have happened during the "update" is that some critical files failed to be copied to the Windows\System32 folder during the installation of SP1 (shlwapi.dll and msgina.dll among them). The winlogon process WAS updated by SP1; when winlogon.exe runs, looks for these dll's, and finds mismatched versions, it fails to execute and XP fails to load.
Basically what it boils down to is that you won't be able to boot to a previous good configuration or boot into safe mode (other than Safe Mode with Command Prompt, and that only IF you're lucky). If you can boot to the NTFS command prompt, find the .cab file containing the Windows XP Setup program (setup.exe) and extract that file and run it, you should be able to do the repair installation (aka in-place installation) and restore XP to a usable condition. If your system originally came with XP preinstalled you'll typically lose all data in the All Users folder and default program templates and settings in the Default User folder, and you may be missing user-added Start menu shortcuts, items you've added to the Startup group, and documents, pictures, and music files in the Shared Documents folder. If you have made backups, of course, those can be restored without difficulty.
There is actually a way to prevent these items being lost after a repair installation or recovery; it's a simple matter of deleting a .txt file from the \System32 folder *prior to the repair operation* (this can be done from the command prompt in Safe Mode with Command Prompt, or from the Recovery Console after booting from the Win XP CD). The command for deleting this file - a file created the first time Win XP was run on your computer, usually by the manufacturer - is as follows:
del /a /f C:\Windows\System32\undo_guimode.txt
(This assumes that C:\Windows is the folder where
Windows XP is located on your system. Replace with the correct path to the file, if necessary.)
I have some more information regarding this issue, but I won't include it here for the sake of those who don't need it/aren't interested. Feel free to email me directly <lady.erin@ukonline.co.uk> if you want the rest, or links to the sites where I found the information.
Cheers,
Erin