Having googled the problem I have tried to use command prompt to chkdsk etc and copy directories but nothing is breaking the cycle. I rebooted the machine and then was able to run Windows activation. Nothing happens on system restore, the startup repair simply continue the loop, windows memory test shut the machine down half way through. I also went to my c: drive and changed the permissions to include 'User', 'Administrator', and 'System' for 'Full control'. I then changed the permissions to include 'User' for 'Full control'. I fixed that by going into 'regedit' and searching for the 'wpaevents' folder. All issues described above have in common that you cannot boot into Windows anymore. If the BCD is missing, corrupt or altered, Windows may not start properly anymore but display the Recovery screen at the top.
Even though this extended my activation period, I was still unable to get the activation program to start up. In short, it stores vital boot information required to start Windows. Next I clicked on 'Start' - 'Run' and in the 'Run' box I typed I then typed 'explorer' into the command prompt to load Windows. I was able to fix this problem by starting the PC in safe mode with command prompt. I ran a repair on XP and after the repair I got a message saying that I needed to activate windows before I can log in.Choosing 'No' would send be back to the login screen and choosing 'Yes' would begin to load Windows, but only as far as showing me the desktop with no icons.
