You compressed all the files? Including the windows directory? Ouch!
You should never compress the root directory or the windows directory. Doing so causes problems with drivers and they system being able to read files from that dir.
I am guessing you are using win xp. If you do not have a system start up disk, you can make one from some one else's XP system.
http://support.microsoft.com/kb/305595
After making a startup disk, try the following.
Try this.
http://support.microsoft.com/kb/307654
How to use the Recovery Console command prompt
When you use the Recovery Console, you are working at a special command prompt instead of the ordinary Windows command prompt. The Recovery Console has its own command interpreter. To enter this command interpreter, you are prompted by Recovery Console to type the local Administrator password.
When the Recovery Console starts, you can press F6 to install a third-party SCSI or RAID driver, in case you need such a driver to access the hard disk. This prompt works the same as it does during installation of the operating system.
The Recovery Console takes several seconds to start. When the Recovery Console menu appears, a numbered list of the Windows installations on the computer appears. (Generally, only c:\Windows exists.) Press a number before you press ENTER, even when only one entry appears. If you press ENTER without selecting a number, the computer restarts and begins the process again.
When you see the prompt for %SystemRoot% (generally C:\Windows), you can start using the available commands for the Recovery Console.
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Expand expands a compressed file. The variable source is the file that you want to expand. By default, you cannot use wildcard characters. The variable destination is the directory for the new file. By default, the destination cannot be removable media and cannot be read-only. You can use the
attrib command to remove the read-only attribute from the destination directory. The option
/f:filespec is required if the source contains more than one file. This option permits wildcard characters. The
/y switch disables the overwrite confirmation prompt. The
/d switch specifies that the files will not be expanded and displays a directory of the files in the source.