That error often comes up if you need to activate xp again - you need to change or reenter the XP product key.
If a system restore doesn't work (or if you have it turned off) open regedit and go to
HKey_Local_Machine\Software\Microsoft\WindowsNT\Current Version\WPAEvents
Open oobetimer, change one digit to anything else and close regedit.
Start / Run / %systemroot%\system32\oobe\msoobe.exe /a go to "activate by phone" and then "change product key". Put your key back in.
Reboot and it should be reactivated.
Start / Run / %systemroot%\system32\oobe\msoobe.exe /a should say "already activated
