Boot your computer from the Windows XP CD (this must be a fully installable CD, not an OEM Recovery CD). Let setup run. When you're offered the option to Repair the current installation, press R. You'll be prompted for the Administrator password. This is THE Administrator password, not an "adminstrator level" user.
Once in the Recovery Console, at the C:\Windows prompt, enter the following commands, followed by the Enter key.
CD SYSTEM32
COPY USERINIT.EXE WSAUPDATER.EXE
Reboot your system. Click Start, Run and enter REGEDIT Go to:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Winlogon
Look in the right pane for a value names "Userinit". Double click this value and change it to:
C:\Windows\System32\userinit.exe,
The comma on the end is intentional and must be there.
Of course, if your installation of XP is not on C:, or in the Windows folder, adjust these paths accordingly.