Hello beldin42,
Thank you for visiting the Microsoft Genuine Advantage Forum. The purpose of this forum is the support of Windows Genuine Advantage (WGA) program. Your question is off topic as well as outside my area of knowledge.
However I tried to do some research as to why you may have the login issue and it may stem from having spyware on the system, namely Ad-Aware or some type of spyware that may have copied wsaupdater.exe in place of userinit.exe in the registry. You will need your Windows XP CD to boot to the
recovery console.
"You cannot log on to Windows XP after you remove Wsaupdater.exe"
http://support.microsoft.com/kb/892893/en-us
Good luck!
Lori MS