Sounds pretty much like a problem I have with my laptop.
Before running off to get a paid repair - hold down F5 on boot up, select repair anad if possible select last known restore point which will restore the system to prior the SP update.
The problem I have with my laptop which wont install the update is one of the checksums on a system file is incorrect - the system works perfectly but SP1 fails to install spectacularly - its well documented and a complete pain in the a$$ - the only fix is to re-install the OS from scratch which is not practical at the moment.