Thank you for the very detailed post. I am happy to give you the usual fix for "NTLDR is missing" but you will need a real XP CD, not a recovery disc, to do them. However, the information you gave about your computer freezing when you put in the recovery discs leads me to suspect that a software fix (the NTLDR fix) will not work because you have hardware failure.
I would start troubleshooting by testing the hard drive, which may have failed.
Test the hard drive with a diagnostic utility downloaded from the drive mftr.'s website or use Seagate's SeaTools For DOS. You will create a bootable CD with the file you download. You will need third-party burning software to do this such as Roxio, Nero, or the free ImgBurn. Burn as an image, not as data.
http://www.seagate.com/www/en-us/support/downloads/seatools/seatooldreg
http://seagate.custkb.com/seagate/crm/selfservice/search.jsp?DocId=201271 (how-to)
Boot with the CD you made and do a thorough test of the drive. If it fails any physical tests, replace it. Let me know the results of this test before we go further. If you have any questions about how to perform the hard drive test, please let me know.
MS-MVP - Elephant Boy Computers - Don't Panic!