Oh boy Here goes...
I had a similar sounding problem. First, I received a message that MS recovered from a critical error. Then, after a minute or two the computer would shut down and a list of files from the driver folder would display for about 30 seconds. and then the boot menu would appear. "Safe Mode, reboot from last known configuration, Normal Mode" menu. The computer would sometimes keep cycling in a shutdown, start booting up then restart.
It turned out to be a corrupt driver from my Linksys USB Network Adapter. It was solved after I replaced the device with a dLink. And uninstalled the Linksys device.
Recommend: Unhook all unnecessary peripheral devices so all you have connected is monitor, keyboard, and mouse.
Uninstall devices by going to My Computer, right-click and select Properties, and then click on Device Manager. Click on the "+" beside the category then select a device. Right-Click the device and select Uninstall. Now keep track of which devices you Uninstall: Display Adapter, keyboard, mouse, USB network adapter if you have one, printer, etc and when you reboot your computer XP will install fresh drivers from a system file it stores.
In the case of the Linksys USB Network Adapter I had to uninstall the driver then reinstall it from CD it came with. Goto Start -> Control Panel -> Uninstall/Install Programs and uninstall the Linksys driver.
If that doesn't help then you may have to use the recover feature. Look for directions on how to use.
Cheers, Words