<<...I ran Magic Jelly Beans, which extracts and allows you to print out all of your software keys. The last 4 digits of the Product ID for Win XP SP-3 in my registry (HKLM\Software\Microsoft\Windows\Current Version\Setup\) differs from the number extracted by Magic Jelly beans.>>
Well...I don't believe they should match, I've never looked in the registry for a license key. I suspect that the data entered there is encrypted or transformed in some way from the actual key.
I haven't used Magic Jelly Beans in some years, so I can't vouch for its accuracy...but I know that using SIW, http://www.gtopala.com/
, yields the actual license key, reflected under the Licenses category.
<<To rule out virus or spyware issues, I have run MS Security Essentials as an Administrator, from safe mode, which found and cleaned a few items. Unfortunately, the original problem still persists.>>
Well...IMO, there is no one application which adequately protects a system. I speak as a simple user, not as an authority of any sort. Basic system defenses begin with a firewall, supplemented by installation of critical updates...installation and maintenance of a one reliable AV program...and (IMO) two reliable antispyware/antimalware programs. Of course, the biggest weakness in trying to protect the system...lies with the user, so I don't really see how anyone can place such reliance on any given program.
As for your system issues...have you tried a clean install of XP? It's amazingly good at allowing users (who want to) to pinpoint the probable cause of their woes, by virtue of eliminating the O/S from contention. By extension, malware is somewhat eliminated also, at that time. That leaves hardware items as possible culprits for continuing problems...not necessarily easy to troubleshoot, but can be done if approached in systematical fashion.
You also mention another variable...the media used for installing/repairing XP. If the media is not properly made (it can be tested on a different system for functionality) or has some inherent or transient defect (e.g., scratches, dirt, smudges), then the files may fail to be properly read and installed on the hard drive.
And...recovery/restore CDs were not put together by OEM system manufacturers...so that they could be used for reinstall/repair purposes...unless the OEM so states such in the directions for use of such. A MS Genuine XP CD is my weapon of choice, updated via slipstreaming and tested before I need it.
Since you haven't revealed what system model you have...I might as well add the fact that SP3 installation on certain systems...must be done following the path defined by the OEM. HP comes to mind, but I'm sure there are more.
Sorry...I know of no easy answers to your dilemma, but I know where I would suggest starting.
We have a lot members...maybe one of them can suggest something more palatable.