Have you tried booting from your Windows XP CD and using Recovery Console
A Pre-Install Environment CD is another route, and the one I'd most likely favor; you should be able to at least access and copy the files from the faulty machine, as long as the machine's root drive physically runs OK, is recognized by (even if not read/write accessible to) the machine, and simpy has what amounts to a data error. A Pre-Install Environment CD essentially amounts to a stripped-down version of Windows which runs not from the machine's hard drive but directly from the CD itself, leaving the machine's files and folders untouched by the machine's operating system and the macine's resident operating system uninvoked - very handy for data recovery or for heavy-duty yuckware cleaning.
Info on how to assemble a powerful, flexible Pre-install Environment CD may be found HERE
. I use that one, BartPE, myself, modifying its add-ons to suit any of a number of setup, recovery, and analysis jobs. If a volume, file or folder exists on the subject machine, odds are BartPE will let you get at it, view it, manipulate it, and copy, move or delete it.