I don't know what to tell you about the XP installation. but here is what you can do to get any files you need off of your drive, provided it isn't corrupted.
you need:
a USB thumb drive. however big you need to get the files off of it. if it's not, and the individual files are smaller than the total storage capacity of the drive, that's fine too. you can find a 512 mb thumb drive for less than 20 dollars.
a computer with a cd drive that can burn cd's, and obviously, burning software and a blank cd. i would recommend 'CDBurnerXP pro'. it is free, and will fit the job.
about two hours of your time, depending on the computer you are using's connection.
to start go here: http://linuxcentral.com/catalog/index.php3?prod_code=L000-589
download the knoppix 5.0.1 live CD. it will come in .iso format.
put the blank cd in the drive, and make sure you select to 'burn cd image' or 'burn iso image' from whatever program you are using to burn. this just copying the .iso file over will not work. while you are at it, put the usb drive into the computer, and make sure it is formatted in FAT32, or NTFS format.
after the CD burns successfully, put it into the broken computer, put the usb thumb drive into a free USB slot, and reboot it, holding f12 as it restarts. this will bring up the boot options menu. select 'CD-ROM/IDE Device' and knoppix will boot automatically.
You will be able to use a filesystem manager from this point to copy any files you need from your hard drive to the usb thumb drive, again, provided that the filesystem on the hard drive is not corrupt.
After that, make your decision if you are going to do a full clean install or attempt a repair install.