Borked windows

[Fabula]

I've got a little problem...
Turned on computer and got:

"Windows could not start because the following files are missing or corrupt:

Windows\System32\config\system
"

Luckily I have my old and slow XP install (separate drive) on boot menu, so can get into windows and troubleshoot a bit.
Disc seems to be fine. Check for errors and no problems.
Reboot.
Same problem.
Put in original XP-CD and get into recovery console.
chkdsk /p
"One or more errors were fixed"
Reboot.
Same problem.

Start hunting for possible solutions online. Find lots of very similar ones, all based on restoring some files from a system restore point.
Try to use solutions:
All system files etc visible.
"C:\System Volume Information is not accessible. Access is denied."
No problems, right click on "System Volume Information" folder and select properties.
Solutions call for clicking on security tab, and sort things out.
Find two system restore points, one from first install, one from around the time the problem happened.


Help!