In my personal experience...OEM systems (those made by Compaq/HP, eMachines, etc.) can produce errors reflecting invalid activation when the software installed by the OEM becomes damaged.
My way of dealing with this has been to delete everything installed and then do a clean install from a genuine XP CD but there are other problems which could result in the symptoms you described.
It's probably best to take it in for a hands-on look
. I would ask them to check the hard drive also...before attempting anything draastic.