looks like its not reading the system registry in the system 32 folder - I would assume this is for one of 3 reasons. 1 - virus corrupted system32. 2 - computer cant read system 32 due to file system corruption. 3 - hard drive is dying and computer cant read those sectors.
first thing to try is get a windows dvd that goes with your os - if you have windows home premium 64bit get that etc. then boot from the cd, select repair this computer and then try system restore - if that doesn't work try running a checkdisk.