\windows\system32\config\system is missing or corrupt

I'm wondering if someone can suggest the next step for me - I too am receiving the error message about missing or corrupt file and have seen many "fixes" posted on the web. But my trouble is a little different. I have the XP install DVD and when I put it in the computer and start it up it doesn't do anything different - i have tried to change the boot setup (F12 i think upon startup) and try to prioritize it to the number one spot, but it doesn't save the change (although it does look like the drive light is on during startup). I can't boot it up in Safe Mode or any of the options that appear on that screen. Everything I try takes me back to the black screen that says something along the lines of insert the original install disk and press R to go to the restore menu. I cant' get the thing to boot from the DVD. To note - on the screen where you can change the boot order, it doesn't say DVD drive it says CD (but the drive came with the computer). One thing I was able to do was to go some sort of system troubleshooter (it's a Dell computer) and you could do a full scan, a short scan or go through a tree to pick a scan that best suits your problem. I went into the tree and scanned all the things listed under "my system will not boot up" and everything checked out fine. Any thoughts? This is actually my brother's computer and they are pretty computer illiterate so it's hard for me to get more info. Would appreciate any suggestions. Thanks!