Windows xp does not continue to start up

Question

my friend has a 2year old pc with asrock m266a mobo and seagate 80gb hdd.when he turned pc on yesterday, windows xp didnt continue and displayed the message...corrupt or missing.... windowssystem32configsystem ...he tried re installing / repairing the windows xp by booting with the xp cd, but it doesnt continue... what would you suggest he do? is the hd unusable already? what about his data files in the drive... can he still save them? tnx.