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Grrr as well.. i was hoping turning off real-time protection would do the trick. :(

i agree, at this point, the repair install is probably the easiest and next best thing to try
 
So this became a great story about how a little knowledge can be dangerous - which I only share in the hopes that I can help someone else somewhere else make their life easier. Grab a beer or coffee, sit back, and try not to spray your drink out your nose while reading about my disaster.
So I decided to do the repair reinstall, after getting what turned out to be some bad advice, by using regedit to change the E: drive to the C: drive and vice versa so the machine would boot from the install disk. It had been years since I used F12 so forgot about it, but I did Google the above method before trying and several other people had suggested this as well.
After restarting, not only did my computer not boot from the XP install disk but it stopped at the light blue XP screen where users can select and sign in - only without any users. It jsut sat there with the XP logo. Frozen. Forever. A great advertisement (lol).
I did a bit of Googling and remembered F12, booted to the install disk, and on the final screen where you choose which disk on which to install the OS, in the disk listing all it said was "Unknown Disk (there is no disk in the drive)." Bummer.
When I tried to install on that disk anyway, I got the blue screen with the stop error 0x0000008E and some ---.sys message.
After several hours on the phone with Microsoft and many F2, F8 and F12 investigations, they got frustrated, refunded my tech service fee, and told me that based on the stop error code the problem had affected the non-OS software and I needed to call Dell.
After several hours on the phone with Dell and many F2, F8 and F12 investigations, they got frustrated, refunded my tech service fee, and told me that the stop error code meant it was a hardware problem and that when I made the reg edit it must have been written to a bad sector - mostly based on the fact that my HD is 4 years old. I wasn't really buying this, but went and bought a new larger HD anyway. I installed it and the same errors occurred both with a normal boot attempt and an install disk boot attempt. By the way, by this time a startup no longer led to the XP window, I just got a black screen with a flashing cursor.
Sooo the next day after several hours on the phone with Dell again running all the same diagnostics, they decided it was the software on the memory card. I think they were just tired of me and wanting to end the call. To their dismay, i have two of the same machine bought at the same time in my house and the other one was fine, so I switched out the memory cards and again, same problems. Then they decided it was the BIOS battery. Switched it out. Same problem, except this time I first got a message saying 'system battery is low.' Cool.
So last night in despair (we run a business off this machine, too, so were down 2 days' work and income) I took it to the Geek Squad without high hopes. After 2 hours and 3 geeks, after ruling out the mobo, bad SATA cables, power supply (one theory being F2 Drives could see the disk but XP couldn't because SATA cable was good but power was bad so disk wasn't spinning), and a BIOS problem, one of the guys figured out the first half of the issue. My Dells are about 4 years old, and shipped just as SATA was becoming standard. The XP install disk has no SATA drivers, which is why the install didn't see the old 'bad' drive OR the new one. This led to realizing that everything was pretty much fine (though we never figured out the boot-to-black-screen issue or the 'system battery low' issue) and they put their own disk utility drive in, reset my registry to the day before I screwed it up and then we got back in the system. **phew**
So the machine still won't boot normally, however it runs fine in Safe Mode Networking, so we were able to catch up on business files a bit. The thing I need to decide is whether I want to put Win 7 (which I disliked in beta) on the new drive, or do I put XP on there (which doesn't cost me anything and I like better anyway) and THEN go back and edit the hive LOL. That older drive will become a data drive one way or the other.
Anyway, that's the loooong story. Don't mess with your registry, don't call Dell or Microsoft for help, and don't disparage the Geek Squad even if you live in a small town - they only charged me for a half hour too!
Matthew
 
Wow! What a saga! (sorry, am just now catching up.....)

Did you get Win 7? As if you haven't at this point i think you could just as well stick to XP Home (unless it's more limited functionality just doesn't seem sufficient for your needs). But re: problems with editing the hive: while googling the topic appears you weren't the only one with that problem it seems you and other unfortunate ones with that problem were in the distinct minority so i would think a clean install of XP Home should fix that problem (and as i recall some other Local Account issues you said you experienced).

Also, I'm guessing whatever backups you do are file/folder type backups? You'd probably find something like Acronis True Image that can provide both drive image backups along with typical file/folder backup functionality worth it. That way you can also keep drive image backups to fall back to if needed (tho i sincerely hope you don't ever find yourself in this type of situation again!)

/* edit */
Oh! But wait a minute... your Dell XP CD didn't include SATA drivers?
> Then i'll guess you don't have the original Dell XP CD for that computer?
> As to do the clean install you'd either need the original from Dell or
> You'll need to be able to add the SATA drivers in to the install process or
> Check BIOS to see if the drive can be set to emulate in IDE mode
 
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