WARNING! This will reformat your hard drive and you will lose anything stored on it.
This is not true any more if you do a "repair install".
Boot from the XP CD, do *not* use the Recovery Console, accept the license agreement, and it will find the existing XP installation.
Highlight it (it will be selected if it's the only one - most likely the case) and press "R" instead of Enter to repair it.
This will reload XP, but will preserve all of the files and programs installed.
It works well - I just had to do it a few days ago. I was cleaning up my hard drive and I guess I deleted something I should not have and when I rebooted, I had NO services. (They were still listed in the registry, but the Services applet in the Control Panel was completely blank.)
I did a repair install and it got me back working again. I didn't lose a thing and didn't have to re-install anything except Windows updates.
After doing a repair install, you must run Windows Update multiple times until there are no updates available. Since it reloads XP from the CD, it may undo some updates.
See this site for more specific instructions: http://www.michaelstevenstech.com/XPrepairinstall.htm
There's a better way
Re-Installing Windows-XP
If you need to reinstall Windows-XP and want to keep all your current installed applications and settings:
1. Start Windows-XP
2. Find the location of your source files (a folder called "I386" , May Be on Your Install CD or a folder on your HD)
3. Run WINNT32 /unattend ,,, For example,
C:\windows\I386\winnt32 /unattend (type this command into the RUN box, then press ENTER)
I've often needed to do this to repair something that had gotten corrupted and I didn't want to do a clean install.
That routine is from "Lockergnome" site..