I agree with other posters that this sounds like a physical HDD failure (your symptoms are very similar to the ones I had last weekend, which were the result of a failing hard drive). If booting from your XP CD and installing (not selecting the repair option on the first screen, but selecting "install" and then telling it to repair your installation) doesn't work, as it didn't for me, you should use a drive utility to see if you have physical problems. You can download Hitachi's Drive Fitness Test here:
Hitachi Downloads. You can download either a file that unzips to a bootable floppy or an .iso to burn to a bootable CD. The program works on any drive except a very few IBMs, although a couple functions are locked out on non-Hitachi drives. Nevertheless, it can tell you whether your drive has failed. If it has, get a new drive and install XP on it, move this one to a slave on your IDE bus, and get as much data off of it as you can before it completely eats itself.
As an aside to the jokers telling you to "get a Mac", I enjoy that kind of back-and-forth on tech threads as much as anybody but that kind of comment on a thread started by a guy with a real problem is obnoxious, to say nothing of unhelpful. He wants to get his computer going, not hear how much better your personal preference is - to say nothing of the fact that Macs use the exact same HD technology as every other computer and I'd be surprised if they ran any better than a PC does with a failed HD.