Windows XP SP3, Corrupted registry. Corrupt/missing windows system32\config\system - Recovery through Recovery Console unable to copy original files from system32 folder. Please Assist.

Just to be clear, when you tried, for example to run this command:

     copy c:\windows\system32\config\system c:\windows\tmp\system.bak

you got some error message (please post it in full) or perhaps nothing happened.

But you made another directory (say "c:\windows\otherdir") were successful in running the following command:

     copy c:\windows\repair\system c:\windows\otherdir\system

If that's the situation that you find yourself in, essentially you're unable to create a backup copy of the current corrupted registry.  This isn't the end of the world, because as you can see by reading the full KB article, you never use those *.bak files anyway.  That step is just included "out of an abundance of caution" so that you can restore the original, corrupt registry files if for some unknown reason you wanted to do so.

Given that you can't start the system anyway, you might as well proceed with the process described in the article without creating those *.bak files. 

You can either do the delete step first:

    delete c:\windows\system32\config\system

or just try to copy the files from the repair directory over the files in the \system32\config directory and answer "Yes" when asked if you want to overwrite the existing file.

Note that the successful completion of this procedure assumes that you have been running System Restore.  Otherwise, you'll end up with the registry as it existed when Windows was first installed -- which almost certainly won't be compatible with the state of your machine today.

Essentially, what you are doing is the following:

1. While in the Recovery Console, restoring the registry to its state when Windows was first installed.  This permits you to start Windows -- but don't try to use any application program.

2. While in Windows, copying the registry saved in a recent Restore Point to a location that can be accessed by the Recovery Console -- but not using the System Restore application itself because with the "original" registry, System Restore isn't aware of those restore points.

3.  While in the Recovery Console, restoring the registry using the files you made available in step 2.

I'm not really sure what the point of the article's step 4 is, unless it's to use System Restore to restore to a different restore point.

If you can't get things working using the above steps, or if there are no recent restore points to use in step 2, then you are correct: you have to backup your data, do a clean reinstall of Windows, and then reinstall your apps from original media and restore your data from the backup. 

If you are able to do step 1 and start Windows with its original registry, you should be able to use Windows native tools to backup your data.  I wouldn't use NTBackup, but rather just copy (don't use the "move" command) the data to an external hard drive.  Alternatively, you could boot to a live Linux CD (e.g., Knoppix) to access your drive and copy off the data.  Or if you have a bootable CD from a disk imaging application like Acronis, you could use that.  If you need further information along these lines, post back.