http://support.microsoft.com/?kbid=314477

Try Method 4. You'll have to enter Setup(BIOS) so that your computer will boot to your XP cd. 

As you already boot from the CD you are trying to Repair from Recovery Console which asks for default  Administrator Password which is usually blank ( not set)
-----------------------------------------------------
Microsoft Windows(R) Recovery Console

" The Recovery Console provides system repair and recovery functionality.
Type EXIT to quit the Recovery Console and restart the computer.

1: C:\WINDOWS

Which Windows Installation would you like to log on to
(To cancel, press ENTER)?  (or type 1 & press Enter to use 1: C:\WINDOWS )

(next you get)
Type Administrator password :           (not User Account (Computer/Administrator) password but
                                                              default Administrator password)
                                                            (usually not set so just press Enter key & if not accepted
                                                             set Auto Logon to Recovery Console when Windows starts OK)
-----------------------

To set AUTO Logon to Recovery Console so it doesn't ask for default Administrator password
Use Start > Run & type   regedit   then navigate to HKEY
Set SecurityLevel  DWORD value data is set to 1 in the following registry key:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Setup\RecoveryConsole
SecurityLevel    1
--------------------
If it doesn't accept no password (press Enter key) you could try Windows Repair from boot of XP CD
Not the 1st R for Recovery Console but the next R for Repair after you start install it is displayed on next window.
If you use Repair the installed Programs & Data are left intact but you need to download Windows Updates again including SP1a.

Message Edited by gryjhnhpe on 11-14-2003 09:10 AM

Thanks for the help.  I was able to finally run the recovery console after I created a bootable Windows Home SP1 disc. After I recreated the NTOSKRNL.EXE file I then tried to reboot and now I get a different error message.  Finally I tried to run the repair and it got all the way through where it tries to delete the current files and then rebuild them. It got to the point where is tried to create folder \WINDOWS\system32\ias.  It was unable to do so.  It says "Setup cannot create the folder".  Now I'm really stuck.  Not sure where to go from here.  Any suggestions??

Did you use Recovery Console to Expand into;
C:\WINDOWS\system32\ntoskrnl.exe  as your 1st Post said incorrectly  Windows root>\system\ntoskrnl.exe

Also what the new Error message when you try to boot from HD. ?,
& how did you create boot XP Sp1 disk if Windows won't start & why did you need to use Disk for Recovery Console.?