If you have repaired windows XP with an older CD, you could get the windows expired message, after completing setup, asking you to activate first. If you click YES, the activation screen doesn’t show and you get logged off (immediately or after 20 mins with only the background visible). If you choose NO you get logged off as well. Safe mode without networking allows you in, but activation can’t be done under safe mode. Quite the problem.
I found a solution in the newsgroups, I’ll copy it here for keeps sake:
I was having the same issue with Windows XP Media Center Edition. Installing SP2 over SP3 was not the problem for me, though I thought it was at the beginning. I had to change out a motherboard, and then had to reinstall windows. I was unable to enter safe mode or normal mode without the Activation popup, and then after clicking yes to activate, it would show my wallpaper and do nothing else. Have been searching for a few days for an answer with no luck. Found alot of information on wpa.dbl licence and registry fixes and people saying that it was due to having an OEM copy of XP. None of these were the case for me.
HERE’S THE FIX…
Download Internet Explorer 8 and Hotfix KB946501, burn them to disc
Hotfix KB946501 http://support.microsoft.com/default.aspx/kb/946501
Internet Explorer 8 http://www.microsoft.com/windows/internet-explorer/default.aspx
Start your PC and repeatedly hit F8 to get the safe mode menu.
Choose safe mode with command prompt only (if you are unable to enter safe mode otherwise)
When the command prompt appears type “explorer”
Should load the Windows GUI behind the cmd window
Install the KB946501 hotfix from your disc (reboot may be needed after this)
Reboot normally in to Windows, you should be able to activate as usual.
Apparently the activation Window is dependant upon IE.
Hope this works, let me know.
All credit goes to RowdyRocket, original topic can be found here.