Unless you want to read up and research the Recovery Console it might be easier all round to just to boot from the XP CD (as long as it is not a OEM Recovery Disk) and run windows over itself and repair it that way.
HOW TO: Install and Use the Recovery Console for Windows XP (Q307654)
Try repairing windows by running it over itself. You will lose all your windows updates but your files will be untouched.
REPAIR WINDOWS
Boot from XP CD
(Windows will now load some temporary files)
Options after booting
*To Set Up Windows XP now press ENTER
*To Repair a Windows XP installation using Recovery Console, press R
*To Quit Setup without installing Windows XP, press F3
Press ENTER for first option (don't select Recovery Console)
(Accept Eula agreement)
Follow onscreen instructions to repair windows installation
How to Perform an In-Place Upgrade (Reinstallation) of Windows XP (Q315341)
How to Recover from a Corrupted Registry that Prevents Windows XP from Starting (Q307545)
If all you have is a Manufacturer's Recovery Disk a full format and re-install are the only options if you can't boot into Safe Mode or Recovery Console. Unless you can borrow a XP CD to get into Recovery Console or buy XP.