Go to Start - Run and type %Windir%\INF then press enter.
It may be that you need to reinstall System Restore. It certainly worked for me when all else failed.
In Windows Explorer go to Tools - Folder Options - View Tab and uncheck “Hide extensions for known file types”.
Find the sr.inf file, right click on it and select Install.
If the Files Needed dialog box appears, click Browse and point to the i386 folder on the Windows XP CD or to the i386 folder on the hard drive, if it exists, or for systems updated with the Service Pack 2 CD or Downloaded from Microsoft, browse to the C:\Windows\ServicePackFiles\ folder.