|I've never heard of an external drive causing permanent damage to an XP installation - when you say you were 'using some files', what exactly were you doing? It sounds like there has been some damage to the windows installation - but you can't do that by just pulling out a USB connector, unless you were doing something that involves system files.|
What does the blue screen say? Is there an error message on it? does it mention specific files?
What's this ESC to run safe mode - its F8 or F5?
A repair reinstall might fix the problem (but you will need a windows xp disc that matches the version on the laptop exactly (eg, if its XP Home OEM version, XP Home retail version would be no good, as the key on the COA wouldn't work). Also best if at same service pack level as the installation (eg, probably SP3) - you can create a SP3 disc by slipstreaming the service pack into an earlier install disk & then creating new CD (google this if you need to).
But you might not need to something as time consuming - the blue screen detail might help.