I believe he is having the issue that is referred to here: http://www.geekstogo...Off-t15771.html
I wanted to add a workaround that I had to this issue but the current thread was locked.
The suggested problem to the login issue is that the Userinit.exe file in the System32 folder is either corrupt or missing due to spyware/viruses.
The fix was to boot using the windows disc, go into the repair console and rename/copy the userinit.exe as wsaupdater.exe
(Read above thread for actual instructions)
My issue was that my userinit.exe was completely missing, so it could not be copied, and since no users exist on the XP disc, there are no user related files(IE: userinit.exe)
The workaround supplied for this was to either
A) Burn a new XP disc and add your own userinit.exe to it when burning
B) Copy the userinit.exe to a floppy and add it in the repair console
seeing as how I(and I'm sure many people) dont have an external floppy drive, the 2nd wasnt an option. And copying and burning a disc was too much trouble.
So, i finally get to, my workaround:
(This requires an external drive enclosure)
-Remove the drive from the problem computer and hook it up to the enclosure
-Plug the drive into another working XP machine
NOTE: If your problem was caused by malware infection, there is a chance you could "catch" the infection as well, make sure you are properly protected yourself and scan the drive once you plug it in
-Now, locate the userinit.exe file on your working computer(C:\Windows\System32\)
In my case, I dont know if it was overkill or completely necessary, but I copied all the user files(User.exe, user32.dll, userenv.dll, and userinit.exe) as all were missing from the infected system.
-Copy and paste these files into the same directory on the problem drive
-Disconnect, reinsert the drive into the computer, and, with some luck, voila! You should be able to get into your desktop.
-It's my recommendation to then backup your data(If you havent) then reformat the computer.
Hope that helps anyone who was having this issue as I was.