This might work:
Boot with the CD.
This will overwrite MY Documents folder and also your favorites. I don't know what all else it overwrites.
to fix the problem without losing your most important data:——–
you may repair windows xp by reinstalling main files. the way to do this is using your xp cd and when the chocies appear hit enter to install windows. "DO NOT TYPE R TO GO TO LOAD THE RECOVERY CONSOLE" you will then accept the agreement and then it will ask you
Select the XP installation you want to repair from the list and press R to start the repair.
windows will then erase and copy new files to the hard drive. the computer will later boot and when it asks you if you want to boot from the cd dont hit anything just let windows run and theN setup should keep working.