Seems that the boot sector may be corrupted.
Boot the computer using the XP CD. You may need to change the boot order in the system BIOS so the CD boots before the hard drive. Check your system documentation for steps to access the BIOS and change the boot order.
At boot, you will be prompted with the following options:
A. To setup Windows XP, press Enter.
B. To repair Windows XP installation using recovery console, press R.
Choose the option, "To repair the Windows XP installation using recovery console", press R. If an Administrator Password have been established, you will be prompted to type it in. If no Administrator Password exists, just press ENTER.
You will be presented with the following:
Microsoft Windows® Recovery Console
The Recovery Console provides system repair and recovery functionality.
Type EXIT to quit the Recovery Console and restart the computer.
Which Windows Installation would you like to log onto
(To cancel, press ENTER)?
Press the number 1 on your keyboard and hit Enter.
At the command prompt, type the following command and press Enter:Attrib -s -h -r C:\Boot.ini
Ren C:\Boot.ini Boot.old
- When you receive a message that is similar to the following message, press Y:
Total Identified Windows Installs: 1
-  C:\Windows
- Add installation to boot list? (Yes/No/All)
- You receive a message that is similar to the following message:
Enter Load Identifier
- This is the name of the operating system. When you receive this message, type the name of your operating system, and then press ENTER. This is either Microsoft Windows XP Professional or Microsoft Windows XP Home Edition.
- You receive a message that is similar to the following:
Enter OS Load options
- When you receive this message, type /fastdetect, and then press ENTER.
Note The instructions that appear on your screen may be different, depending on the configuration of your computer.
Once done type the following at the Command Prompt and press Enter:Fixboot C:
You will receive a message about this command. Allow a new partition boot sector be created.
Type exit, and then press ENTER to quit Recovery Console.Let me know how it goes.