This is the perfect opportunity to save your data if you haven't done so already. If you are having trouble with the data saving, see the data recovery page.
Now, you are faced with a choice between repairing your windows XP installation or having a clean reinstall. I recommend the clean install (the harder choice) even if it takes longer, your system will be fast and clean. Since it is so time consuming to reinstall windows XP, you really should consider backing up your windows XP after the installation (save an image of your installation with all your drivers and software's installed). By doing this you will always be only a few minutes away from a clean new install. To learn more about backups Click Here.
Recovery is generally faster but not guaranteed like the reinstall. Another downside with recovery is that it is not guaranteed to be flawless, and some errors might stay. That makes the concept of backing up a little shaky as you might backup errors and viruses as well.
So here you go, my advice is that if you think your problem is big go with the reinstall. If you only have a buggy system go with the recovery.