windows\system32\config\system corrupted and no option for Recovery Console

[Big Booger]

Basically from what you are saying it sounds like your hard disk is hosed. Do you hear any clicking or anything from the hard disks?

I'd say try a new/spare hard disk, and see if you can start a fresh install of windows Xp. If that works, then you can try to RMA the Hard disk back or junk it if the warranty period has expired.

It could be a cable as beelzebub said above. Check the cables and power connectors first and rule that out. Also check the power supply, make sure all other hardware is seated correctly.

While in the BIOS you might want to set everything back to default.

Have you tried running the Dell Diagnostics tools:

http://tinyurl.com/ayebe