i dont't think tat u can do anything bout it as a system folder is missing...u better put in ur windows installation disk (if u have it) and type "r" after the cd boots to repair ur windows installation..
Insert WIN INSTALL DISK, choose install (press install 4 a new install). After it searches for old installation of windows, press R. Setup will check for HDD errors, system errors, etc. and correct them accordingly.
Its really sad that members don't suggest to read "Frequently Asked Problems" thread even it contains solutions. I request all members to suggest this thread if you find solution to any problem.
i was fed up and then decided to reinstall the OS so i put the disk and where it asked to select the drive i gave the same drive where OS was present then i continued by this option 'Leave the current file system intact(no change)' and it tried to recover my disk and told to restart the PC , i did it and Voila!!!!