Fix lsass.exe Error Immediately After Installing Windows XP SP3

Problem:

Just installed SP3 on several similar generation Dell machines--some installed with no issues, but 2 did not. Upon restart, the following message comes up: "lsass.exe system error. Security accounts manager initialization failed because of the following error: A device attached to the system is not functioning. Error status: 0xc0000001. Please click OK to shut down this system and reboot into Safe mode, check the event log for more detailed information."
So when I click OK, it just reboots into normal mode and has the same error message. I can reboot into Safe mode using F8 and get to files, but it will not go into normal mode. Haven't found any malware or any other obvious problems--not sure what to even look for on the event log, or where to look for it.

Solution:

I have a XP Service Pack 1a disk, so I have tried the following methods to get running.
** Method 1 **
- Repair from SP 1a disk (system works)
- Install SP3 using offline SP3 update version (system works)
- Install IE8 from offline version (system works)
- Run windows update and install Post SP3 patches and reboot (lsass.exe ERROR)

** Method 2 **
- Repair from SP 1a disk (system works)
- Install SP3 using offline SP3 update version (system works)
- Install IE8 from offline version (system works)
- Run Norton 360 to check any viruses/malware. None found (system works)
- Run windows update and install all Post SP3 patches and reboot (lsass.exe ERROR)

** Method 3 **
- Repair from SP 1a disk (system works)
- Install SP2 using offline update version (system works)
- Allow Automatic updates to fully update SP2 then SP3 and IE8 (system works)
- Allow Automatic update to install Post SP3 patches and reboot (lsass.exe ERROR)