A long shot would be to install Windows XP again in a different directory on the machine and then try to see if you can find what's going on. Generally this type of thing isn't caused by SP2.. it's some type of bad software, or bad hardware. Your hard drive could be failing, trying to install a second install of XP on the same hard drive might identify what is going on, or at least let you get the machine up to where you can try to archive your data
Even eaiser is to install a new harddrive, install xp on that, and then hook up your other drive as a slave so you can do diagnostics.
All of these are very long drawn out processes that take as long, or more as wipeing and reloading the machine. If you are just trying to get a quick fix and aren't worried about the data- do a restore it's fast, but you loose your data. If you just care about data, you need someway to get to the data, you could remove the hard drive and put it in another machine to copy the data (friends or whatever), reload and then copy your data back.
If it's software you are trying to save you can do the long drawn out install a second copy of windows xp on the same drive and then try to troubleshoot the first install, but if you aren't an expert with this type of thing you're probably just going to take up a lot of time.
Sorry your options don't sound better...