Well...I would run the chkdsk /r command for the troubled install, from the second install. I would also run SUPERAntiSpyware on that partition, along with Malwarebytes. There is no one program that does it all.
IMO, it's always good to verify that the file system/hard drive have no known problems...before doing anthing more serious.
<<It is very important I get into the corrupted OS for personal files>>
Assuming that you don't have more serious problems...you can always move data files from the 1st install to the 2d install...to minimize any risk of data loss during analysis/testing.
To move files which are in the Docs & Settings group, you will probably have to take ownership of the files.
How to take ownership of a file or folder in Windows XP - http://support.microsoft.com/kb/308421