I've been researching the problem and trying to fix it for the last month.
I've tried using the Windows Recovery Console, fixmbr, fixboot, chkdsk /r, dozens of times without success. I've also copied the ntldr and ntdetect.com from the CD. Nothing works and my laptop just keeps giving me the blinking cursor. I've also tried using TestDisk but to no avail. I've also done a parallel XP install but it fails to boot after the files are copied from the CD. The only thing that I haven't tried is to re-size the partition to less than 136 GB, which fixed this problem for some.
If I format the drive and install a fresh copy of Windows the drive works fine and boots up normally. So obviously there is something wrong with the booting of the original OS or something not quite right with the partition but all checks say there are no problems. I've restored the backup image I made above, using Drive Image 7, and can successfully boot it with the RIPLinux GRUB. I really need the original XP to work because of the amount of effort to re-setup the whole thing from scratch is incredibly difficult (more difficult than trying to wait a few months to fix this).
Any idea how to fix the booting problem? Or has anyone come across a solution. I've already spent about a month fixing it but have so far failed yet I'm so close.
How I ended up in this mess: The problem was caused by me because I had PGP Desktop 9.9 installed and running with an encrypted drive, I subsequently installed Drive Clone Pro to backup my drive before going on holiday (not realizing that it would try to install its own boot manager) which toasted the PGP boot loader. I managed to decrypt and un-instrument the drive with the PGP Recovery CD (took 11 days to decrypt it while it was plugged into my 'hotel' room under the bed!). The decrypting subsequently toasted my partition, which was accessible prior to decryption. I then managed to recover the partition with Partition Table Doctor, which made everything accessible allowing me to recover all my files (later found out that TestDisk would have done this as well). I took an image of the drive after that to save a current copy of the files (200GB, 3 million files, took forever).