Run a repair install, run Hirens and check your hard drive for errors or failure, attempt to reload the OS. Ghost your data to a new drive, and use the original one as a slave. It will work. And all of your data will still be accessible. Your computer should boot normally. If it doesn't, or it there are errors, run the Repair Installation option from your Windows boot CD. Could also be a virus preventing access to the drive.
*****Sorry I don't know enough to follow your directions... I only have the OEM, not any separately purchased XP disk... agghhh!!*****