yea sp3 is just the latest update for the xp. As in if u installed the original xp.. it would just update back to sp3.
So can you go to the screen to boot via hdd or cd??
depending on what u end up using to reinstall/repair
Go download a windows xp from like... isohunt.
And either burn that to a cd.. or put it on your external hdd.
So if u want too keep your pc files..
first try and use the repair option to fix your problem
If that fails... go to the install (may be called restore) option and partition the new OS onto the external hdd (may ask you to convert the hdd to another format eg NTSC)
Let it do its work... (will take a while since its external hdd) and let it boot up.
First of all try and access and files that u want and put the onto another thumbdrive or external hdd.. if you dont really care for them then click on computer
and navigate to the folder you need to replace.. eg. C:\Windows\System32\config
(just copy and paste that into your top bar)
From that copy either just the system file or the whole config folder... and then navigate back to your original PC hdd and find the same location then paste folder/file in correct spot.
shutdown computer. Unplug hdd. Turn pc back on. Hopefully resolved problem
alternatively... going back to where i said partition hdd... you could do it on your actual pc hdd..This will still retain your files/folder/work/everything and it will be put in a folder called windows.old BUT if your using a downloaded version of windows... you might be unluky and the key u put in wont be valid and therefore your new windows wont work properly.
Hence why doing it on the portable hdd is better, once finished just format external hdd.