Issues installing windows xp on a HP Mini Netbook

I own an HP Mini 1000 Netbook and recently I compressed my files to save disk space (horrible mistake). I wasn't aware it was going to compress my critical systems and boot files. The device was no longer able to boot ("BOOTMGR is compressed press ctrl+alt+del to restart"). By doing research from a friend's computer I was instructed to either use the HP Image Creator to restore the factory setting or use my operating system disk to remedy the problem. Well it's a netbook and has no optical CD drive so I went with the first option. I got the image creator onto a USB flash drive and it proceeded to clean my hard drive and restore my netbook to original settings. Next was to load my windows XP back onto my netbook. I used your youtube video tutorial for making a bootable flash drive for installing windows xp via wintoflash. I then inserted the flash drive into my netbook, booted from the usb, and proceeded to install windows in GUI mode. It finished but then when it restarted, I got a "missing or corrupt <windows root>\system32\hal.dll" message. I spent hours retrying the windows xp to flash steps and tried booting windows in text mode and every combination of the sort. Is there any remedy to this issue that I can solve on my own before paying someone too much money to do repair it or even lose my netbook altogether?