Windows could not start

if you have XP CD
Then use it,to repair your computer
follow the instructions, then click R at the first screen
type:
fixmbr and y when prompted
fixboot and y when prompted
chkdsk /p

get a copy af a windows xp home edition cd and boot it. now choose repair to access the recovery console.
In the recovery console you can manually copy the files or try fixboot, fixmbr, chkdsk to repair the OS.
Read more about recovery console: http://support.microsoft.com/kb/307654/en-us

That's funny the same thought at the same time... ;-)

After booting from ERD disk and copying the system hive from the repair folder to the config folder, the computer now starts to boot into Windows but comes up with an error that doesn't stay on the screen vedrfy long before rebooting back through the POST each time. It says  lsass.exe-system error and 'When trying to upadte a password, the return status indicates that the value provided as the current pssword is not correct. That's as much as it does right now. If I had the recovery software I would definately stop wasting any more time but I have to persist.

why you dont reset your password using:
home.eunet.no/pnordahl/ntpasswd/editor.html

This one worked for me (actually 30 minutes ago) http://www.kood.org/windows-password-renew/
If you booting up with BartPE / WinPE (and presumably with ERD) it works like a charm.

The error is happening when booting into windows not from ERD

Yes, I understood it. The suggestion was to boot up computer with ERD (Microsoft Diagnostic and Recovery Toolset) and run password renewal tool to change the administrator's password.

OK. I'll try that. Thanks.

There is a good chance that you may have the Sasser virus also. The Sasser virus causes the exact error you are seeing. I would download the Symantec Removal Tool for Sasser (FixSasser) from here:

http://www.symantec.com/content/en/us/global/removal_tool/threat_writeups/FxSasser.exe

Place it on a floppy or usb stick.

Disconnect from the internet on the problem PC.
Boot with ERD Coomander
Run the fix
Use ERD to reset the password if needed.
Reboot.

OK. I'm not stupid but I can't load the password renew software. I have plugged in a USB stick but it isn't recognized. . I then ejected the ERD disk and put password renew CD in and well you can guess. ERD stops working when the disk is ejected. Am I missing something here?

Yes. ERD does not support PnP - you have to insert USB key BEFORE you boot up computer with ERD.

Plugged in memory stick before booting from ERD. Can read it now but when I execute password renew and select windows target directory it says that 'This windows directory is currently in use or operating system is locking your access (might happen when using this tool outside WinPE, you can only add new user outside WinPE).

Damn ERD... Sorry, I don't know how to workaround this problem in ERD. I am afraid you will have to get another tool. The quickest (and probably must better than ERD) alternative is Ultimate Boot CD for Windows:  http://www.ubcd4win.com/downloads.htm

This CD contains the required password renewal tool (and hundreds other useful things).

Thanks for everyone's help. ERD fixed my problem so the points go to the flubbster.  Respect.