LSASS.exe System Error

I have been searching for solutions to this problem for 3 days and hope you can help!

The problem started with a "Registry File Failure Stop: c0000218 Cannot load the file stemroot\system32\config\software its log or alternate is corrupt, absent or not writable."

I followed the steps in MS KB307545 using Recovery Console, but c:\windows\repair\system file was not found. At that point, I was able to log into recovery console using a blank administrator password, but now I get the message "The password is not valid. Please retype the password."

Next, I attempted the repair option on the XP reinstallation disk. It appeared to cycle through the process, but then it stated, "Setup is being restarted" and I get an error message as follows: "lsass.exe-system error When trying to update a password this return status indicates that the value provided as the current password is not correct." I am not updating a password or even using a password; it just continutes to reboot and display this message.

Following a tip I found on a forum, I downloaded a password editor from http://home.eunet.no/~pnordahl/ntpasswd/ to reset my administrator password. It indicated that my password was indeed blank, but recovery console still won't accept it.

I have also read that these lsass.exe errors can be due to a Sasser worm. My Norton is up to date, so I doubt that, but I'm not sure how to check for it since I can't get past the XP screen. I can access a DOS prompt using the Dell recovery CD, but my DOS is really rusty.

Any advice would be most appreciated!