I’ve got another self-induced problem with my PC, which I’m going to document here in case you have the same problem and don’t realize where it comes from.
Occasionally, Windows XP hangs while booting, at the [ Applying computer settings… ] messagebox.
Now, for me at least, the explanation has some background. This is my laptop, which I carry from site to site and use on different networks. All of those networks supply TCP/IP addresses and other information via DHCP. Some of those bits of “other information” are the DNS servers that the PC should use. On most of those networks, the DNS servers are reliable. On one, they’re not. 
So when I’m on that one network, I sometimes have to override the addresses given by DHCP and set the DNS addresses manually. That also means that when I leave that network I have to put that setting back.
Sometime I forget.
This laptop is also part of a Windows 2000 domain. Windows 2000 uses DNS extensively. Perhaps now you see the combination that leads to the problem.
When a PC that’s part of a Windows 2000 domain boots, it needs to “talk” with its domain controllers. It uses DNS to find them. If DNS is set wrong, it can’t find them… and it hangs.
So what’s the solution? Well, for me it goes like this. The laptop boots, and hangs. I see the messagebox, grumble to myself, and pull the network cable. It then continues to boot though it didn’t really finish the required domain conversation (just like it would if it were on one of my other networks, it’s “smart enough” to do that). Once it’s up, I go back to the Network Control Panel and re-set the properties to use the right DNS servers.
[later] Shawn McGrath also says that I could just disable the Network Location Awareness Service (Start – Settings – Control Panel – Administrative Tools – Services – Double Click on the Network Location Awareness (NLA) Service – Click on Stop – Then Change the Startup type to Disabled). In my case (at least half the time I need to actually be logged into my enterprise’s domain structure) I’m not sure that would work but it’s worth a try.
Start->Control Panel->Network Connections. Right-click on Local Area Connection, select Properties
This is a good tip that I’ll try in about 3 minutes cuz I have this problem very often. I knew it was DNS-related because as I sniff the packets, I see my laptop trying to talk to the two DNS servers but the DNS servers don’t respond. I see not only port 53 (DNS) but also kerberos and netbios ports. It almost seems as if it’s DHCP-related as well.
To be specific, I’m going to try to disable NLAS. My DNS settings are correct.
btw, you say “Shawn McGrath” but link to “shawnmcgraw.com” The mcgraw site requires a login, but if I try shawnmcgrath.com it shows a resume of someone who might have been able to help.