First of all, I'd save any data that is required - address book, emails, word processor documents etc.
Then boot with the XP CD and try a repair install - that may work and solve some of the problems (although to be honest I think that you need to format the drive and start again). click here How to Perform a Windows XP Repair Install
If the repair doesn't work, try a clean install. During that you will have the option to format the disk and it will be checked for errors.
IF you wanted to, you could take the C drive out and set the D as master and then install XP onto that and see if it helps.
One last thing: are you sure there are two disks and not just one that has been partitioned?