Soon after Screen Three, you'll be presented with the normal "Welcome to Setup" screen, as shown in Screen Four.
The poorly worded options in Screen Four lead many users astray. The only mention of "Repair" here is "...repair a Windows XP installation using Recovery Console..." but that's not the no-reformat repair/reinstall we're seeking. (The Recovery Console Repair option is useful in its own right for fixing relatively minor problems with the operating system, and we fully explore it in the links listed above.)
The repair option we do want--a nondestructive, no-reformat reinstall--is actually hidden beneath the Setup option, "To set up Windows XP now, press ENTER."
So hit Enter, just as if you were setting up Windows afresh and from scratch.
The next screen, about licensing, gives no reassurances that you're on the right path for a nondestructive repair/reinstall--in fact, it's the same screen you see when you're setting XP up on a virgin hard drive. But this is only the first of many screens that the Repair option will borrow from a full-blown setup. Press F8 to accept the licensing terms and to go on.
Next, the XP setup process will show another screen that you may recall from your initial setup of XP. It searches for "a previous version of Microsoft Windows." In our case, we're not replacing a previous version of Windows, but rather repairing the very same version that's on the setup CD--but that's OK; it's just another poorly worded screen.
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