Mike,
Just had this problem the other day as well. In short, I reloaded Windows XP. Of course I had most everything backed up so its a mere inconvenience.
If you have the XP disk you can try going from into your bios, set your boot device as the CDROM and it will take you to a screen with two choices.
Continue installing XP
Go to Recovery mode
Select recovery mode. This will get you to a command prompt. If you haven't backup important files, recovery mode should allow you to do that. As an absolute last resort you can try typing bootcfg / rebuild at the command prompt. That supposedly creates another Windows XP boot file. One that you can give a different name and select upon boot up. The only problem here is it asks you what drivers you want to load. I tried all this and managed to get to windows safe mode with networking but couldn't ever get it to boot to windows in normal mode.
As with Kriptap's advice I'll further the notion of a virus although I did several free online virus scans and nothing came up. The reason I think its something new and insidious is my recovery dates were limited only back to the date of the original failure...so I couldn't use recovery mode through windows to restore my PC. Furthermore, I couldn't seem to load enough drivers to make McAfee run a virus scan. BTW - My PC was being protected by McAfee as well.