|Could you try to logon with username: Administrator?|
If not, try to restart PC on safe mode. F8 when XP boots up. If you can go into safe mode, try run a system restore to a earlier point by start, programs, accessories, system tools, system restore.
If none of them works, go to more techie step as follow:
Enter the Recovery Console
Boot the system using the Windows XP CD-ROM. In the first screen when the Setup begins, read the instructions press "R" (in the first screen) enter the Recovery Console. Type-in the built-in Administrator password to enter the Console. You'll see the prompt reading C:\Windows (Or any other drive-letter where you've installed XP)
Type the following command and press Enter.
(If that does not work, try CHDIR SYSTEM32)
COPY USERINIT.EXE WSAUPDATER.EXE
Quit Recovery Console by typing EXIT and restart Windows.
You'll be able to login successfully as you've created the wsaupdater.exe file (now, a copy of userinit.exe)
Now, change the USERINIT value in the registry (see Phase II in this page) and change it accordingly.
Hope it works for you