How Badly Is My HD Corrupt?

[itslog1]

hi all, recently i've got this message popping up on my laptop's screen.

"Windows could not start because the following file is missing or corrupt:

\WINDOWS\SYSTEM32\CONFIG\SYSTEM

You can attempt to repair this file by starting Windows Setup using the original Setup CD-Rom.
Select 'r' at the first screen to start repair."

ok, some facts:
-though i'm not sure this is a virus, i have had a lot of history with such problems on my laptop that have caused me to reformat and reinstall Windows XP
-i have many files that i would like to save before i eventually reformat (i imagine this is the ultimate solution)
-more importantly, i have "intellectual property" is what i believe is the term is, stored on my HD that i may or may not even be able to recreate, so recovering it is crucial
-i've done some research and saw the outlook is bleek, there are no permanent fixes, but there are ways to get around and boot windows up properly again
-this is my goal, to boot windows up properly and save my data to disks/cds, then whatever comes after that may be.
-does running "chkdsk /r" in recovery mean anything to anybody?

thanks, ANY tips are appreciated.