Missing .dll component from System32 Folder

Ok, this is a bit of a strange problem, I think.
It started last week, when on my computer the night before I was playing a game I had installed a few weeks previously. That was the last thing installed. The next day after playing the game on the night, my girlfriend starts up the computer and there's an error message before login saying...
"winlogin.exe could not start because SHLWAPI.dll could not be found" and then all you can click is 'OK'.
After about 30 seconds, it comes up with another error message saying...
"lsass.exe could not start because the component SHLAWPI.dll could not be found" (or something similar, same component though). After clicking ok on that one, it stays on the blue screen forever (not BSOD) and we have to restart the computer. In short, we cannot logon whatsoever.
So, we took it to a friend, who knows quite a bit about BIOS and stuff, and we took in an XP disc we used to install XP that was from a different computer, we had preinstalled Windows before formatting so we had a keygen, don't worry, but we had to use a Medion XP disc instead of one that matches the computer.
We attempted to replace the missing component today using the Recovery Console, but it has a password on the disc preventing us from going any further.
Formatting is not an option at the moment. We have many serious college documents, vital to our current assignments (possibly meaning that if we cant get the work back we could fail our course) and other various personal things that we couldn't live without, such as photographs and art.

The most ironic thing is we are a week away from purchasing an external hard drive to back everything up, only we weren't expecting this to happen.
Any suggestions are highly welcome, although we do have one possible solution which might work...
Our friend (as mentioned before) may have a disc that doesn't have a password on and is compatible with our system. Which we are trying tomorrow midday.
Our solution after that is to use our current HDD as a Slave drive and to use another as a Master.

We're using Windows XP SP2 (probably the problem in the first place).

Thanks for reading, hope someone reads this in time.