First off, remove any newly attached hardware, if there is any, and try booting it again. If you still have problems then read on.
BIOS vary, you need to look around for a setting for "Boot order" or "Boot priority"...usually it would be under Advanced BIOS features but not on every BIOS. If you're getting an option for "Last known good" your mainboard is not completely "gone" just yet...if that was the case the bootstrap would never get hit and you would get no Windows options at all. It is possible that the CD drive isn't being recognized but I think you would be smart to take a closer look at the BIOS and see if you can find the boot options. Some BIOS will have a section that lists attached devices like hard drives and CD drives...you might want to see if there is a setting like that relating to your CD drive and make sure the drive isn't disabled.
See if you can get into the Recovery Console...it might already be installed, it should be an option on the screen you get that offers last known good, otherwise you'll have to see if you can boot up that CD and go into the repair section of setup and get into the recovery console from there. If you can get in there you could try replacing the system file to fix whatever is causing the boot up problem:
Commands:
C:\WINDOWS>
cd c:\windows\system32\config
then do a quick backup of the system file just in case...
C:\WINDOWS\system32\config>
copy system system.old
then...
C:\WINDOWS\system32\config>
copy c:\windows\repair\system.bak system
then type
exit and the system will reboot...might work after that.
If you make it this far, congratulations...but you'd still have to fix whatever was causing the reboots. I would disconnect the internet connection and download
Stinger from NAI on a working machine and then run it on the broken machine to see if it finds a virus. If the reboots go away without the internet connection then your machine is probably vulnerable to an exploit...run all critical updates from Microsoft. This could be a little difficult but if you have another XP machine that's not having the problem then you can look at what patches it has and compare the two, then download the updates that are missing from the problem machine to floppies on the working machine and update it that way.
Good luck.