This serious error problem could be caused because of corrupted System Restore (Event
ID 1003)
To fix the problem:
1. Control Panel / System.
2. Select the System Restore tab.
3. Check the Turn off System Restore box.
4. Press OK and press Yes to confirm.
5. Shutdown and restart Windows XP.
NOTE: You may still receive The system has recovered from a serious problem message.
6. Control Panel / System.
7. Select the System Restore tab.
8. Uncheck the Turn off System Restore box.
9. Press OK.
10. Shutdown and restart Windows XP.
You will lose all your restore points but you can manually create a restore point
after you have cleared the old ones.
Also see Kelly's link
http://www.kellys-korner-xp.com/xp_s.htm
Scroll down to serious error for other ideas, especially the paging file.