Recovering files from laptop with XP that won't boot

Take the hard drive out and use a USB hard drive enclosure. If you don't have another computer to access the hard drive from a USB enclosure with, then I would use a Live CD.

The windows CD does come with an option to fix a current installed widnows when you run it as I recall, I'd give that a shot first, it's quick and easy and should not harm if you don't select the format option :)