Xp activated in Normal and safe mode, but not in safe mode with networking

Yes, it is.

how do i fix it?

no one had never seen that?

Yes, I have! I have just come across the same problem on a PC that I am trying to remove the "System Check" malware from. The problem may have been there for ages or may be as a result of the malware. I dont have a solution at present but i'm in a catch 22 in that I need to get into Safe Mode with Networking to clean the malware and cant do it from normal mode as the malware wont let me!

I'll look further into it and post back if i find a solution which doesnt involve reinstalling the PC!

Download Puppy linux (about 100meg) and put it on a CD. Boot from the CD and then do an online scan from there to get rid of the malware. Puppy linux runs in memory and is a self contained OS

The 'solution' i was refering to was the Safe Mode problem, not the malware one - that was another issue that i mentioned 'in passing' that i have now fixed.

However I had to resolve the Safe Mode problem before i could sort out the malware problem. The solution to that seems to be to remove internet explorer 8. Reboot, sort out any activation and then reinstall it (preferably from a full download, not from windows update).
It worked for me and seems to have worked for a number of others from other forums I found.

Hope this helps.