WINDOWSSYSTEM32CONFIGSYSTEM is corrupt
Your system displays the error message.
Windows could not start because the following file is missing or corrupt: WINDOWSSYSTEM32CONFIGSYSTEM
That means the System Registry Hive has become corrupted.
There are two ways to get back up and running. The easy way which doesn’t always work, and then there is the hard way.
Easy Way — Note that this doesn’t always work.
When you are booting your system, press the F8 key during the start of the bootup sequence, meaning after it does the Power On Self Test.
Once you press the F8 key, you will be taken to a Menu. Select “Boot Using Last Known Good Configuration”.
It will now attempt to load Windows XP using a past set of configuration files.
If that doesn’t work, there is the next step….the hard way.
Boot your system with the Windows XP Install CD, let the system boot into the Setup. Once in the Setup, choose to run the Recovery Console.
You will now be presented with a screen similar to good old DOS.
First, we will recover the System Hive.
Now, type in the following commands with pressing Enter after each line.
copy C:windowssystem32configsystem C:windowstmpsystem.bak
copy C:windowsrepairsystem C:windowssystem32configsystem
Be very careful when you are typing in these commands, one wrong move, and you know, broken Windows XP.
Also, change the C in the commands to whatever your Windows XP drive letter is.
Attempt to boot the system, if it doesn’t boot, get back into the Recovery Console and do the following commands.
copy C:windowssystem32configsoftware C:windowstmpsoftware.bak
copy C:windowsrepairsoftware C:windowssystem32configsoftware
The full Microsoft Support Knowledge Base Article that I based this FAQ entry on can be found here (Q307545).