A system restore will not revert Windows XP back to the state of the Install disk. System restore is not an option to restore the OS to the original state of an Installation CD.
It depends on what is causing the problem. If it's an application/update problem, a system restore from safe mode could fix that. However, if it's a windows installation/driver issue, the windows repair would be the way to go.
If you know around when it started causing problems, look in the event log for some sort of update, or error. You should also look in the device manager for conflicts.
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