I think SP2 broke a DELL

My sister’s computer is a DELL 8200 desktop running XP home. It blue screens at the windows boot up screen with this error and reboots: (Stop: c0000135 {unable to locate component} This application has failed to start because winsrv was not found. Re-installing it may fix this problem.)
She had auto up date on and I think it installed SP2 and here is why, the bars that scroll at the windows boot screen are blue aren’t they originally green and when SP2 is installed it makes them blue? Ok here is what has been tried so far, can’t boot into safe mode, tried last known good configuration, did not work. Won’t boot to command prompt. I did find this from Microsoft http://support.microsoft.com/default.aspx?kbid=875350&product=windowsxpsp2 haven’t tried to remove it with the recovery console yet because all she has are recovery disks from dell. Can I use one of my XP disks on her computer just to get into the console? Sorry for the long post but she is freaking out because nothing is backed up and she knows better.