Reinstalling XP- activation loop

Hi, I am stuck booting up my other computer. I reinstalled Windows XP due to a problem with IE with the Dell CD that came with the computer (new 3 months ago). It seemed to install Ok but now I get stuck in a loop I can't get out of. It ask me on start up whether I want to activate Windows XP. Whether I answer yes or no it just takes me round a loop back to the same login screen.

 

I can't even start up in Safe Mode or restore to previous known good configuration. As I can't actually get into Windows XP my troubleshooting options are limited. I've scoured the net/ Message Boards to no effect. I'm considering phoning Microsoft- any ideas much appreciated