Hi you may be infected.
A repair install would be my next move.
All your files etc should remain intact.
Insert the XP cd in the CD ROM Drive then switch on the computer.
You will receive the following message:
This portion of the Setup program prepares Microsoft Windows XP to run on your computer:
To setup Windows XP now, press ENTER.
To repair a Windows XP installation using Recovery Console, press R.
To quit Setup without installing Windows XP, press F3.
DO NOT at this point select R.... DO NOT SELECT R
Select ENTER
On the Windows XP Licensing Agreement screen
Press F8 to agree to the license agreement
Select current installation of Windows XP.and then
Press R to repair Windows XP.
Follow the instructions that appear on the screen to repair Windows.
After you repair Windows , you may have to reactivate your copy of Windows XP
http://www.michaelstevenstech.com/XPrepairinstall.htm