In my XP installation (w/SP2), copies exist in both c:\windows\system and
c:\windows\system32. Their creation dates appear to be the same, although
the one in c:\windows\system is named in all caps. I don't know whether both
are needed.
There's also a shell32.dll in c:\windows\system32 that appears to have been
installed by SP2.
You may be able to fix things using the system file checker:
http://support.microsoft.com/default.aspx?scid=kb;en-us;310747&Product=winxp
(from the command line, sfc /scannow)
I wonder if your Path environment variable is incomplete; I recently had to
manually add
%SystemRoot%\system32 and %SystemRoot%\System32\wbem to get the system to
find a .dll associated with saving restore points.
If you need to resort to a repair installation, here's how to do it:
http://support.microsoft.com/default.aspx?scid=kb;en-us;315341
"How to perform an in-place upgrade (reinstallation) of Windows XP"
(In brief: change the machine's BIOS setting to boot first from the CD
drive. Boot from the XP CD. Choose to install rather than going to the
repair console. Under install, choose repair rather than new. This ought to
preserve most installed programs and settings, although it is not
guaranteed. Everything installed form Windows Update will be lost.)
Good luck.
Address scrambled. Replace nkbob with bobkn.