The file's probably not causing it - I believe that error code is indicating an inaccessible boot device. Try booting up off the CD and choosing recovery console then running chkdsk. Let that run and assuming it completes reboot and see if Windows comes up. If that doesn't work then rename c:\windows\system32\config\system to c:\windows\system32\config\system.old and then replace it with c:\windows\repair\system.bak:
If upgraded from Windows 2000 or if Windows 2000 substitute all references to c:\windows with c:\winnt
1. Rename current System as a backup:
copy c:\windows\system32\config\system c:\windows\system32\config\system.old
2. Copy backup of system from c:\windows\repair to c:\windows\system32\config:
copy c:\windows\repair\system.bak c:\windows\system32\config\system - then reboot. This procedure will reset your hardware configuration back to the time of initial set up of Windows - you may have to reinstall device drivers but your data should be in tact. Good luck.