@Red
I've come across many PC's that had the same symptoms as yours. It did turn out to be a software problem in all of the cases.
XP is sensitive to changes in hardware sometimes. It can also be a corrupted system file.
If no important data needs saving then the best way is to re-format and install from scratch.
I fixed those systems by booting off the XP CD because data needed saving. The procedure follows:
At first it will give you an option of pressing 'R' for the recovery console or pressing Enter to continue the installation.
You press Enter and then press F8 to agree to the license agreement (Yeah like you have a choice :lol: ). It will start looking for any existing XP installation at this point and if it finds one it presents you with two choices again. It should say pres 'R' to repair windows or press enter to continue with a new installation.
At this point press the 'R' key to repair and it will go through all the motions as if it is doing a fresh installation. It is actually only replacing the System files and should keep your settings, drivers and data intact.
It is only good enough to get your system up and running again to enable you to back up your data. I would reccommend a clean installation after any important things have been backed up.
Using another hard drive as the main drive for booting (like you did) is the more expensive solution. :-)
