A problem is preventing Windows from accurately checking the license for this computer.
Error Code: 0x80070002
When Windows XP boots up, after the Welcome Screen a message comes that shows the above message, and it does not allow you to login.
Boot into Safemode
Press F8 While booting just after the BIOS screen or during the OS Selection menu.
Then do the following in the command promt.
cd %system root% \ system32
Reboot and check if the problem persists.
If not check if the following files are present in the System32 Folder
If any of these files are missing, restore these files, from the setup disk, I386 folder or from another system.
To restore from a setup disk, put the CD in, and browse to the I386 folder copy the file with extension XXXXX.XX_ where XXXX.XX is the file name with first 2 letters of the extension. Rename it to a .cab file and extract the file to system32.
Reboot the system and now try again.
Your problem must be solved.
If still your problem persists try the following from Microsoft knowledge base.
Reset the default security provider in Windows XP
To reset the default security provider in Windows XP, delete the relevant registry keys in the Windows registry. To do this, follow these steps:
1. Start the computer. Press the F8 key during startup to start the computer in Safe mode.
2. Start Registry Editor (Regedt32.exe).
3. Delete the following registry keys in the Windows registry:
4. Quit Registry Editor.
5. Restart the computer.
Reset the drive letter of the system drive
Use Registry Editor to change the drive letter of the system drive back to its original value. Edit the following registry key to change the value of the system drive:
Best of luck...