Dude it's not registry corruption, they edited boot.ini via msconfig and it is stuck in a safe mode loop. NOT UNCOMMON.
http://www.computing.net/answers/windows-xp/xp-install-safe-mode-reboot-loop/158671.html
"Just for the records, what I ended up doing was installing a dual boot version of XP, then when I could access the boot.ini files through msconfig, I removed the /safeboot from the boot.ini for my XP boot that was looping. I did that the long way - looks like I could have just loaded the recovery console and modified the boot.ini to remove /safeboot from there. oh well, it works now."