I'm trying to install a stripped down Linux kerel to boot and pull up a custom password screen piece of code (written in C++). If the password is valid then I want to boot XP. If the Password fails, then I want to exit the Linux kernel. The failed Password part exit of Linux sounds straightforward, but the the successful Password then boot XP has me stumped. Can anyone help me here. I would appreciate it very much.

This gives you no additional security over an XP login password, so why bother? The best way to get around any OS's login password is with a boot disk that would bypass your custom bootloader as well. If someone has physical access to your computer, the only way your data is safe is with encryption. Linux supports transparent, strong encryption, with the source code free for anyone to audit. Windows XP has encryption, but it's not as strong, not as well implemented, and probably has a backdoor or two. With Linux, it's possible to have a boot partition (or better yet, bootable non-RW CDR) prompt for a password that's used to decrypt your personal files, the OS, and whatever else you may have, then Linux starts up and everything works as if the encryption layer isn't even there. It's the ultimate level of paranoia.

you can use the bios boot password to protect all disks and os's. without a good bios password login, no drive is avaiable, floppy, cd, hdd, xp, linux, etc.

It's still a matter of physical security. A BIOS password can be cleared by resetting a jumper on the motherboard. Or, someone could take the hard drive out and put it in a different computer, which is exaclty what law enforcement or identity thiefs would do. A boot-up BIOS password is no more effective than setting your hard drive as the only boot device and setting a BIOS administration password. Then at least you don't have to enter two passwords every time you boot. The only real protection is encryption.

The only real way to secure your PC is to lock it into a room, disconnect it from any networks and never turn it on!=o) If you do actually want to use your PC, the lilo boot loader supports passwords to boot different OSs (grub probably does as well) and as Jake says, encrypt your data with at least 1024bit....by the time it is cracked the information will probably be out of date.