Here's what worked:
http://support.microsoft.com/kb/330184
I followed the instructions above and once I finished, After re-booting, I selected Microsoft Windows XP Professional and the System Configuration Utility came up.
On the “General” tab, it shows that the Start Up Selection is on “Selective Startup” with everything checked, but what’s marked “Using Modified BOOT.INI
Tried to change it to “Normal Startup – load all device drivers and services” then re-start.
Windows came back up, but so did the System Configuration Utility and still showing that it was starting up with “Selective Startup”
Now just need to figure out how to start it up in “Normal”, if in fact that’s possible. Will keep you posted and if anyone has any further suggestions, that would be much appreciated.
I do hope this will help all the others that have run into the same issue, which I have found is caused by the Parallels Desktop by they way, not Microsoft, and that start having issues by getting the dreaded " hal.dll " file is missing or corrupt on a direct Boot to Windows.
Very long and sleepless night….
Kitti