How to recover the damaged user profile in Windows XP

The solution recommended in the following Knowledgebase article will resolve the issue:
 

 
However, the solution recommended in the above article suggests to copy the settings manually. Alternatively, you can follow the below solution:
 
Create a new user account:
Go to Control Panel.
Click User Accounts tool.
Select the Create A New Account link.
Give the account a name and click Next.
 
NOTE: Ensure that the account type is Computer Administrator (You can see the option button displayed in the process.)
 
Click Create Account button.
Logoff from the current account, and login with the new account. This will create a user profile for the new account. When the user profile creation procedure is complete log Off from the account without doing any other modifications.
 
Login to the old account again and perform the following:
 
Right-click My Computer, and select Properties.
Select the Advanced tab.
Click the Settings button in the User Profiles section.
Select the user account that was corrupted.
Click the Copy To button.
Click Browse button and then browse For Folder dialog box to locate the Documents and Settings folder and select the new account.
 
A confirmation dialog box should appear that informs you that the original files will be deleted and prompts you to confirm the copy operation. Click Yes.
Once the profile is copied, log off from the system and login again with the new username. All the settings of the old account will be copied.