Win XP won't boot

[ROYP123]

My neighbor's machine has the following message:

Windows could not start because the following file is missing or corrupt.
\system32\ntoskrnl.exe
Please re-install a copy of the above file.

I tried to boot into safe mode- same message
I tried to go back to the last known good configuration- same message.
I tried a repair install of XP , but (not counting the Repair Console) the option for repair install does not come up. Only options are new install or format the partition.
Question: 1 Why no repair install option ? 2. Since I can not get into Windows , how can I back up his data and re install XP ? 3. What caused this? He says his NAV is up to date.
I can get into BIOS , but that is all. His machine is Gateway Celeron 1.2 with 256 DDr.
The only thing I can think of is to slave his HDD into my machine and back up, then reload. Any other thoughts? Thanks
EDIT: (\ is listed just before system32 in the message, but it does not post in this message)

[Cricket]

Take a look at this MS Knowledge Base article, might help.

Cricket

[ROYP123]

Thanks Cricket- that is exactly the weird message he is getting. I printed the article and I will go try it out. I will advise results.

[15Y]

sometimes is sing of HDD going bad,not exactly but it happened to me . also if
you have a burned copy of XP.

[ROYP123]

Report: In going thru the four choices offered by the Microsoft site, none of them worked. But one of them tried the scan disk, and it stopped at 57 % and said the file structure had some serious problems. It has a 40 gig WD HDD , so I used their diagnostics , and it showed problems in about 5 of the 10 categories. So I put in an 80 gig HDD and loaded his XP ( original disk not a burned copy ) and slaved the old HDD. I can see the data, so I made an appointment with the owner to copy his data back over to the new HDD after we load the programs , the NAV , AdAware, Spywareblaster and Spybot. After we save his data to the new HDD I will write zeros to the old HDD and see if that works. Otherwise we scraps his old HDD. Will advise results in a few days. Thanks Cricket- I did not find that Microsoft article without you. Roy