Only works in safe mode, can't install XP, ntdll.dll error

I'm trying to help my friend. For the past few months, his computer won't start in regular mode. It will just go blank and hang after you select a user. He can use his computer in safe mode with networking.

I tried re-installing XP and when I tried, I was getting a blue screen error that said something like "STOP: unknown hard error \SystemRoot\System32\ntdll.dll." I tried download Windows updates on his computer and they don't work. I checked the event viewer and found many errors, mostly these:

Event Type: Error
Event Source: Cdrom
Event Category: None
Event ID: 7
Date: 1/13/2010
Time: 6:47:19
User: N/A
Computer: Joe
Description:
The device, \Device\CdRom1, has a bad block.

Event Type: Error
Event Source: DCOM
Event Category: None
Event ID: 10005
Date: 1/13/2010
Time: 7:17:04
User: Joe\Owner
Computer: Joe
Description:
DCOM got error "This service cannot be started in Safe Mode " attempting to start the service wuauserv with arguments " " in order to run the server:
{E60687F7-01A1-40AA-86AC-DB1CBF673334}

For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.

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His computer is about 7 years old, it's a Compaq, but I don't see why Windows won't reinstall for me. It also has 512 MB RAM and Intel R Pentimum 4 CPU 2.20 ghz.

What else can I do/try to see if we can get it running normal again?

 

The first error you list means the CD-ROM drive is not reading the setup files correctly. Try another CD if available. If still no luck, replace the drive.

The second error is of no consequence, it's typical when running in safe mode, ignore it.