i got hit by this as well. somehow after a while it also erased my activation status for windows xp and i had to reactivate the program again. but i was still unable to remove it. trying to go into safe mode seems to trigger a restart. after one whole day of trying to sort it, i decided to just do a clean format. problem solved. but im interested to know if anyone else have a better solution. i tried using freefixer as well, but i might have deleted the wrong file as well, which might have caused xp not able to start.
so, best thing next was to format.