Severe problem while starting Lenovo 3000 N200

Question

Dear friends & experts,
I am using Lenovo 3000N200 0769BDG laptop. I have following problems while starting the system.
Recently my system was hacked against which I installed an Anti-Malware software. It showed that the system was free from any Malware.(But believe me, it is true that the system was hacked.). But each time on starting the system, a  black and white window  is being displayed which contains the following message:
We apologize for the inconvenience, but Windows didnot start successfully. A recent hardware or software change might have caused this.
If your computer stopped responding, restarted unexpectedly, or was automatically shut down to protect your files and folders, choose Last Known Good Configuration  to revert to the most recent settings that worked.
If a previous startup attempt was interrupted due to a power failure or because the Power or Reset button was pressed , or if you aren't sure what caused the problem, choose Start Windows Normally.
Safe  Mode
Safe Mode with Networking
Safe Mode with Command Prompt
Last Known Good Configuration (your most recent settings that worked)
Start Windows Normally
Use the up and down arrow keys to move the highlight to your choice.
Seconds until Windows starts:30.....1
After 30 seconds, the Windows logo is displayed immediately followed by a Blue screen which lasts for 1 second and the system restarts.  I tried all the options listed above-- from Safe Mode to Start Windows Normally but the same problem recurrs. And the system doesn't shutdown until I press the power button.
I have a licensed version of Windows Xp SP3 as OS. I tried to repair the system using WinXP CD but I found the following message:
Setup did not find any hard disk drives installed in your computer.
Make sure any hard disk drives are powered on and properly connected to your computer, and that any disk-related hardware configuration is correct. This may involve running a manufacturer-supplied diagnostic or setup program.
Setup cannot continue. To quit Setup, press F3.
A point to be noted is that earlier, I removed the Rescue & Recovery from my system  thinking that it might not be of much use and now, I lament for it.
When I press F3 the same window appeared and the same problem recurred.
I tried to access the files in my hard disk using Ubuntu CD and it was successful. I used Lenovo hardware quick test to check for any hardware faults, and my system passed all the tests.
I request you to help me in solving this problem so that I can continue my studies peacefully.
Thanking you,
With regards,
T.I. Kiran

Answer 1

First off, being "hacked" and having viruses/malware are two different things. Someone hacking your computer doesn't really mean you have a virus/malware, it means an actual person gained access to your computer remotely and did something to it.
More than likely you got a virus that corrupt your Windows System directory and/or registry. Anti-malware software won't necescarily detect all viruses, especially executable that run commands to simply delete files.
The blue screen you're seeing is what us technicians call the BSOD (blue screen of death), it's an indication that there is a direct corruption with the core files that Windows requires to function properly.
As an IT Technician, if this were one of my laptops or one of my end-users, I would simply reload it with a fresh copy of Windows XP. There's a possiblity that all data you had on the laptop is gone because if the Windows core files are corrupt/missing, then that could very well mean your system was wiped completely but the boot table is in tact, hence the fact that you even have the option to boot Windows XP.
One other option I would suggest is try to reinstall Windows XP. Sometimes if you have the right copy of the install, it will let you reinstall the Windows XP core files, leaving your programs, files and directories in tact.
Good luck.