Kindly (re)confirm that you tried to Disable automatic restart?
Repeat F8 startup steps, get bootup menu, then select
"Safe Mode with Command Prompt". See if you can get that.
The MS Knowledge Base article noted below, may help in restoring a "prior XP System Restore point",
in the case where you are unable to do this from a Windows session.
The article describes how to start the System Restore tool when you are unable to start your Windows XP-based computer normally or
in Safe mode.
You may be able to do it from a "special command prompt"..."Safe Mode with Command Prompt".
It would seem the requirements are:
1. Your system HD still has restore point(s) from before. (Which also means System Restore is active on your XP.)
2. You have to be able to "selectively" bootup your pc into "Safe mode with command prompt".
3. Follow the directions to use "rstrui.exe" the XP System Restore program.
HOW TO: Start the System Restore Tool from a Command Prompt ( MS Knowledge Base Article 304449)
<
http://support.microsoft.com/kb/304449 >