Resolved xp can't check for license

A friend brought his Dell computer over. Has windows xp pro sp3 installed. Won't boot, says "a problem is preventing windows from accurately checking the license for this computer error code: 0x80040017" can only boot to safe mode (still says it isn't genuine windows)
I ran chkdsk /r it found and fixed problems. No change booting. Am running defrag in safe mode now, taking a long time.
Have tried most of the other stuff I found doing a google search other than a reinstall. Tried system restore in safe mode first but when I rebooted it said it couldn't do it.
Any other ideas?

TIA

 

Thanks for the response Arie, Don't think it's any of those things at this point. After running chkdsk and fixing errors I booted back to safe mode and ran defrag (was pretty fragmented) then I ran chkdsk again and it found and fixed more errors. Rebooted and it loaded windows so I thought I may be getting there but it had a problem with a program and went to a blue screen. I left it for the night as it was late.
Today when I tried to boot to safe mode it hung up. Restarted and it went to checkdsk again so I'm letting it run but I'm thinking my next step is a windows repair from cd but I have the thought that the hard drive may be going bad.

 

OK, Looks like it was some bad spots on the drive. After running chkdsk a 4th time and rebooting in safe mode again I was able to do a restore to a previous date. Some of the bad spots were in the restore folder and it's possible that the previous two restore attempts didn't work because the restore file was corrupt. I am scanning for malware etc now and will clean up anything I find but as far as I can tell the problem is resolved. There is still the chance of a hard drive going bad.