Cannot log on: Getting a "the handle is invalid" error message

I am running Windows XP SP1 on a Dell GX110 machine. Out
of nowhere, I cannot log on to the machine. When I try
to log on to the local machine as administrator, I get an
error message saying that the system could not log you on
due to the following error: the handle is invalid.

I also get the same message when I try to log on to our
company's domain.

When I go into recovery console, the PC accepts the
administrator password, so I know the administrator
account and password are still there, but why will the
machine not validate the usernames and passwords?

Any suggestions?

Thanks,
Brian