I understand that members/users...routinely have the highest expectations when things go wrong.
I would suggest that you abandon such...and try to clearly see the situation as it appears to me.
You have a system which had malware and that has been neutralized.
Either the malware or the process of removing it...has probably damaged any number of key system files.
You have a Gateway system, Gateway's answer to such situations is restore to factory defaults via the software they installed.You have an XP Home CD...so you don't necessarily have use the restore-to-factory-defaults mechanism
If your CD reflects the same SP as your system...you can then use it to either run the sfc /scannow command or attempt a repair install. Neither of these is necessarily going to be effective, since we really don't know what is ailing the system. These two things are just typical ways of attempting to overcome system problems that are due to damaged system files (which is my presumption, not fact).
If the nature of the problem does not rest with Windows but is either hardware or malware...the two attempted remedies I mention will be ineffective.
FWIW: I know of no reason why a valid key for the system it applies to...would not work with a MS Genuine XP CD that is either retail, update, or OEM version. The installation files for Windows are the same, the system is the same...the key should be acceptable for installation purposes. I don't buy "name brand" systems so I can assert such and be wrong...but, logically, the key should work with any valid MS XP Home disk.
How To Use Sfc.exe To Repair System Files - http://www.bleepingcomputer.com/forums/topic43051.html
Slipstreaming Windows XP To Create a Bootable Windows XP CD or DVD - http://www.bleepingcomputer.com/tutorials/slipstreaming-windows-xp-to-create-bootable-cd/
There are others here who are far more experienced/knowledgeable about such situations as yours...perhaps they will suggest something that I either do not know or have forgotten to suggest.
Edited by hamluis, 02 May 2011 - 10:26 AM.