I know installing winxp is not a fun thing. I have xp on my work machine and we were told explicitly to not install SP2. It has caused major problems on several machines. MS also knows there are issues with the sp and they have a download you can run that will block sp2 updates. You may have been the victim of microsofts frantic pace to try and stay on top of all those that would exploit windows faults.

In the meantime you can at least read the files on your xp partition and copy them to cd. Run a fresh install of winxp, I would advise against a parallel install. If you have a packaged pc many have a disk with xp and during the auto script it reformats the drive anyway. Bottom line- windows will run better as a fresh install.