Trying to enter system password so as I can do a system recovery

I downloaded a startup manager and apparently deleted something for starting up windows xp. I log in to "user"( There is only one user), it starts to boot up then 1 second later it goes into log out, then the log in screen pops up again and the scenario repeats itself. SO I cant log in to restore the settings to an earlier. It is a new computer so I tried to do a system recovery. The only problem is that upon hitting F8 it asks me for a system password, NO PROBLEM, so I enter it and the cursor drops one line and asks for it again, I enter it again and it drops another line and asks for it again, IT JUST KEEPS DOING THAT, (BUT) when I enter a WRONG password it tells me that I have entered a wrong password, .. I have tried hooking up 2 other keyboards and the same thing happens all over again.
I want to do a system recovery off the disc but cant seem to get past the password thing, AGAIN when I enter the correct password it drops a line and asks for it again, BUT enter a WRONG password and it tells me that i have entered a wrong password.
How do I get by this password thing OR Why is it not responding when I enter the proper password.