This turns out to have been a little more complicated and a little more interesting!
Yes, the hard disk had a problem, but it was by no means terminal - though I intend to replace it anyway.
Having backed up everything under Knoppix, I subsequently found that the hard disk would now boot after all - although disk access was painfully slow - and a file system check reported 2 index errors had been fixed.
Taking advantage of this good fortune, I ran the "Files and Settings migration" wizard for all the users of the PC, then cloned the C: drive for good measure, using ghost.
Then (but only then!!) I ran the Western Digital diagnostics - which found no problems with the disk at all!
Puzzled, I then ran CHKDSK /R to detect and fix any problems. Still none detected - but the disk was still running like a dog and Windows was like treacle - hardware interrupts into the 90% mark.
Then I recalled a problem I'd seen before, where Win XP had encountered errors on a disk and fallen back from Ultra DMA 5 to PIO - and not resumed DMA when the problems were fixed.
It was then a simple matter to dig out the registry fix for this and apply it - bingo, back to normal!
As I mentioned earlier, I'll be replacing the disk as a precaution (I wanted a bigger one anyway!).
I've put more information about this in another thread about Win XP running very slowly.
Hope this helps someone else!
SD