Your Windows XP System event log contains:

Event Type: Error
Event Source: sr
Event ID: 1
Description: The System Restore filter encountered the unexpected error '0xC0000035' while processing the file &ltFileName> on the volume <VolumeName>. It has stopped monitoring the volume.

This behavior is indicative of more that 1000 restarts. When you restart Windows XP, the Change.log file that System Restore uses to track activity is renamed Change.log.<number>, where <number> is the next available number, up to 1000. If the number has reached 1000, Windows XP cannot rename the file and System Restore is disabled.

To workaround this behavior, turn off and turn on System Restore.

NOTE: All restore points will be deleted.