I encountered this, I slaved the drive on a good system, chkdsk repaired errors on the disk, and I placed it back in the original system without any loss of important files.
A friend just called, she's running XP SP2 on a Dell. When she turns it on it boots to the screen to start in Normal, Safe, Last known, etc. No matter what she chooses it stops, reboots, and back to the same screen. She has the Dell XP CD and the drivers CD.
She's going to bring it over this evening. Any thoughts off hand? From what she describes I may be looking at an install from the CD. Hope not, she has a ton of iPod music.