The repair option should not cause any damage to data that is intact on the drive. If the data is already damaged then you have little hope of recovering it anyway. No point in reinstalling XP if you can repair the original installation.

To repair:
Boot from the CD
Select repair at the first screen
Select repair console

In the repair console (essentially a DOS prompt)
You may have to select the windows installation
You may have to enter a username and password
Once at the prompt you want to type the following:
chkdsk /r

This will run a check of the files on your system as well as the indexes. Depending on the size of the drive this will take some time (I've had it go up to 3 hours) and could look like it is stuck for much of the time. Once it is finished try rebooting the computer.

If it still doesn't boot, I recommend either getting another drive, installing windows and using the old drive as a secondary or getting the data off the original drive and then reinstalling windows. A handy tool I use occasionally at work is the Ultimate Boot CD