Windows XP could not start because the following file is missing or corrupt: \WINDOWS\SYSTEM32\CONFIG\SYSTEM

Insert the Windows XP startup disk into the floppy disk drive, or insert the Windows XP CD-ROM into the CD-ROM drive, and then restart the computer.
At the Recovery Console command prompt, type the following lines, pressing ENTER after you type each line:

md tmp
copy c:\windows\system32\config\system c:\windows\tmp\system.bak
copy c:\windows\system32\config\software c:\windows\tmp\software.bak
copy c:\windows\system32\config\sam c:\windows\tmp\sam.bak
copy c:\windows\system32\config\security c:\windows\tmp\security.bak
copy c:\windows\system32\config\default c:\windows\tmp\default.bak

delete c:\windows\system32\config\system
delete c:\windows\system32\config\software
delete c:\windows\system32\config\sam
delete c:\windows\system32\config\security
delete c:\windows\system32\config\default

copy c:\windows\repair\system c:\windows\system32\config\system
copy c:\windows\repair\software c:\windows\system32\config\software
copy c:\windows\repair\sam c:\windows\system32\config\sam
copy c:\windows\repair\security c:\windows\system32\config\security
copy c:\windows\repair\default c:\windows\system32\config\default

Type exit to quit Recovery Console. Your computer will restart.

http://support.microsoft.com/kb/307545/en-us