Basically, there was physical damage to many of the sectors on the hard disk, meaning that the system did not boot and had some serious issues.
After booting using a USB drive into a diagnostic version of 'mini' XP, I was able to run a program called HDTune. An Error Scan using the 'quick' option showed the area of the drive that was affected.
I then basically resized the partitions on the disk so that the 'bad' parts of the drive were in the unallocated space - hopefully meaning that it won't cause any future problems.
I backed some of the necessary data, then formatted and I will now reinstall XP. Hopefully all is well!
PS - Try not to drop electronic devices.