Why create a system repair point?
Microsoft's "system restore point" is not the original concept, but still does a fairly decent job. It takes a snapshot of critical system files and saves it before a major system change such as installing new programs or Windows components. This way, if the upgrade goes sour and screws up your system, "system restore" can use one of those snapshots to attempt to return the system to a functioning state.

Normally, system restore is enabled in all the windows XP system, it is disabled mostly by some viruses which make some registry changes to disable system restore.

What would happen when system restore is disabled?

1. In System Properties, System Restore tab is not present at all.
2. In Services, the System Restore service is stopped.
When you try to start the system restore service you may receive the following error: 'FOLDER IS NOT EMPTY'

How to fix system restore not working in Windows XP or Vista or Seven?

To resolve this issue, you need to rename the System Volume Information folder, and then restart your computer. Note: To do this, you must use an account with administrator permissions. You need to rename “system volume information” folder in each of your system drive like in C: ,D: ,E: etc except your CD/DVD drive, follow the steps given below with one hard disk drive at a time.

Follow the steps given below:

1. Open My computer, go to Tools >> Folder options.

2. Click on View tab, Under Advanced settings, Check Show hidden files and folders and Uncheck Hide protected operating system files, this will give a warning “You have chosen to display operating system files. Are you sure you want to display these” click Yes and click OK on folder options window.

3. If you have problem in configuring show hidden files and folders, then read this post on how to show hidden files and folders. else skip to step 4

4. Now, right click on System Volume Information folder, and select Rename and give the new name as System Volume Information2.

5. Restart your computer, check if system restore now works, if still it doesn’t work skip to step 6

6. Repeat steps from 2-5 on your next drive of the hard disk in reverse alphabetical order by drive letter (For Example: First F: ,then D: ,E: and so on).