best is to do a repair install of XP, look in Tom's XP forum, fifth post from the top
repair install does not erase the personal files, do not reformat the drive or delete the partitions.
You may need to re install drivers, get them from the computer manufacturer's website.
Afterwords, when the computer runs again, start an online back up service such as Mozy.
Use a high quality anti virus from now on. It is frequently malware that disables your system restore.
I have ran online scans and they find nothing as in malware... virus or trojans..
I use avg antivirus, adaware, spywareblaster, zonealarm firewall and spybot search and destroy. all are up to date and never find anything.. and the restore points are there but they will not restore to a previous point when I run it...
I booted in safemode adn it owrked ..I am not sure Why it would not work in regular boot up though. I have since ran trend micro and found nothing wrong and upgraded all protection again and ran them and still nothing .. maybe just a bad file .. seams to be working ok now...