It sounds like the BIOS can`t see the Hard Disk Drive and therefore "Operating system not found". This might indicate a complete failure of the drive. You say it has started to play up - If you can get it to boot - backup now!
You could see if the BIOS identifies the drive correctly. If you remove the HDD and then replace it that might make a difference by ensuring the contacts are clean. Otherwise I would suggest putting it into a USB caddy and seeing if you can see the data on another computer.
Failing that perhaps a Repair install of XP?