Have you tried booting into safe mode? You hit F8 at the first screen after the bios to get a menu of choices. Pick Safe Mode and when you get into it change the video driver to standard VGA and

If you have a real XP install disk you can re-install over the exisiting version, or you can install into a new directory and in neither case will your files be deleted. The only reason your files would be deleted would be if you selected the option to repartition the drive. If you have a brand name system that only has a Recovery disk instead of a true Windows Install disk then it will probably wipe your drive as you say (Dell doesn't do this).