Use your OS disc to boot into the repair console.
At the command line type chkdsk /r
That will run a checkdisk and try to repair any errors on the disk.
If anyone is reading this old thread for a clue, I suggest you wait before doing anything. I had the same problem with CHKDSK hanging in the same spot every time, but when I let it run for an hour it did it's thing and now the system is working fine.
I have the exact same problem as you, only that I'm using Vista Home Premium, and it stops at "Correcting error in volume bit file" instead, and just stands there for 3 hours (and counting). I HAVE been able to get into Windows twice though (I should have fixed the problem then, I know, but i didn't...) but now I can't anymore. I got the OS with the computer when I bought it, so I have no OS disc. How can I get it to start in safe mode? And if I'm unable to do that, how do i fix the problem?