Windows XP Hangs At Startup

Hello all and thanks in advance.

Recently I've started having problems booting to Windows XP SP3. The computer passes POST and then hangs on a black screen with the blinking cursor in the upper left corner.

I changed the boot order to CD ROM and put a Windows XP setup disk in the CD/ROM drive. If I ignore the "Press any key to boot from CD..." message, the system will proceed to boot from the hard disk and does fine. Also, if I visit the BIOS setup and change the boot order or access the hardware screens, then exit BIOS, even if I didn't save any changes, it will boot successfully from the hard disk.

Shortly after this started (or possibly before and I just didn't notice it) I had a hard drive which began acting up. Windows couldn't read from it and it behaved badly when trying to fix it or read/write. It was a redundant backup so I don't really need it. I have since just unplugged the SATA cable from it. I just mention it in case it could be related to the boot up problem.

The symptoms tell me the MBR is likely bad on the system disk, C. Is that a reasonable assumption? Anything else I should try?

I moved forward thinking I would repair the MBR with the recovery console. I used the Windows XP setup disk and ran the recovery console. When the recovery console asks me to choose an installation to repair, D:\Windows is the only choice. My system disk is C:\, not D:\. I selected number 1 anyway (the only one) and it does NOT ask me for an administrators password, which I thought it was supposed to do. That made me more suspicious that the recovery console isn't seeing my "real" windows installation. I exited the recovery console with no action because I wanted to consult Major Geeks.

Should the recovery console be the tool of choice? Can I confirm that the MBR is bad on the C drive? Why is the recovery console not showing C:\Windows and saying D:\Windows instead? Which utilities are recommended to test for bad sectors or signs of disk failure? What is chkdsk and should I use it? Should i just ignore this and boot up differently from now on?

Thank you!