If you have the right XP disc it might be possible to do a repair instead of a reinstall. Part way through the process there will be an option to repair an existing install or hit esc for a fresh install. Hit the "R" key. This prompt is right before the one for the recovery console. (Actually it might be after that) If you don't see that prompt then it's not the right disc and it's not seeing the installation.
What about simple tests? What happens when you try to ping 127.0.0.1? If that doesn't even work then it's pretty botched.
Here is the best article I can kind relating to doing a repair or a full on attempt to manually fix it.