Okay... The first thing you will want to do, as soon as we can get you running again, is an update to SP3.
I am going to suggest that you do a few things... Most are free.
Most are safe, though some require some special handling of parts, or care in following directions.
1. Get and run memtest... memtest will provide a RAM diagnostic on a non-bootable system. See...
https://www.techspot.com/vb/topic62524.html
We want to make sure that faulty memory is not your problem
(Caution: IF you understand the dangers of static electricity and why it is important not to get any foreign matter (sweat, skin oil etc) on printed circuit boards and chips!) If ram is faulty, then replace and see if issues resolve, otherwise... proceed to step two,
2. Is this a desktop or a laptop? If it is a desktop, then ...
Do you have access to another system where you can install this hard-drive as a slave?
If so, then do so and back up all your data on the other system.
If it is a laptop, then I would recommend using a product like Apricorn to make a copy of your drive.
see...
http://www.apricorn.com/product_detail.php?type=family&id=39
What we are trying to do is save your important data.
While it is out, Identify the maker of your hard drive, model number and serial number.
These may be needed later, and now is a convenient time to make note of the information.
If you are unable to save your data using either of these methods, then repost before moving to step three.
3. With the information about your hard drive, find and download the utility software provided by the manufacturer.
It may be in a form that can be run outside of windows.
If it runs from windows, run it inside your viable windows installation (step 2). Alternatively, run ChkDsk from within the viable windows installation.
What we are trying to do is see if your hard drive has gone bad, or if it is repairable.
If you cannot get a utility package for your hard drive... or if you cannot use utilities on your hard-drive as described above, then ...
4. Move the drive back to the unbootable system, Install the recovery console and run chkdsk.
Look at this information from MS...
http://support.microsoft.com/kb/307654
If you are not comfortable with these instructions, we can probably help you through it.
My purpose is to get you to the point where you can run ChkDsk to check your hard drive for errors.
5. If you have not already done so, run ChkDsk, with the option to automatically repair errors.
6. Go into bios, and configure to boot from your cd. Place your windows cd (or OEM recovery cd) into the cd-rom drive and try to do a repair install.
Do not try to do 3, 4, 5 or 6 until you have been able to back up your data...
unless you do not mind losing it.