I'm glad I've got the Windows XP Recovery Console installed as it just saved my XP installation which for reasons unknown to me the bootsector was corrupted, not cool. Luckily the fix only took mere seconds, and I was up and running again. Whew.
It's been often said on here by the malware removal experts to install the Recovery Console to aid in the removal of malware, well it's also very good for restoring your system with the utilities it provides to get back into a good working state. You'll of course need to be comfortable using command line programs, and it wouldn't hurt to learn now for the future. Not having to go the route of the dreaded format and re-installation is best avoided if possible!
Bleeping Computer has a very detailed article with screenshots on how to use and install the Recovery Console, which is something I'd highly recommend:
http://www.bleepingcomputer.com/tutorials/tutorial117.html
The official article from Microsoft is located here:
http://support.microsoft.com/kb/307654
Recovery Console is also the utility that the XP install CD uses for the Repair function, but of course you'll need to understand how to use it beforehand hence the articles listed above.