FWIW: Anytime I see that a system has hardware configuration issues of any kind...I think "CMOS battery". A $4 item that can wreak havoc with users.
System manufacturer and model?
<<...the message BAD_SYSTEM_CONFIG INFO...>>
<<...missing or corrupt: \WINDOWS\system32\config\SYSTEM>>
Corrupted Registry, Config.sys Missing or Corrupt - http://support.microsoft.com/kb/307545
Can you access the BIOS?
Have you tried booting into safe mode?
Have a MS Genuine XP CD from which to access the XP Recovery Console?