Hello, I too have this problem. I tried the steps from the Miclonestuff, I mean Microsoft,support link but I cannot, or it will not let me, get past the first line- copy c:\windows\system32\config\system c:\windows\tmp\system.bak, I get a message saying it cannot be copied, does this mean a reformat and total re-installation, or have I missed something.
CHECK LIST:
Missing system file error message-CHECK
XP CD(for recovery console)-CHECK
Computer-CHECK
Support page link(http://support.microsoft.com/kb/307545/en-us)-CHECK
Brain-Ummm-So So