Windows SP1 setup failed

I have been running Win XP Pro for some time when I decided to install SP1
via a Windows install CD that contained SP1. When I inserted the CD I was
recommended to do an upgrade, which is what I choose.

I ran the entire Windows setup completely, choosing download updated setup
files, until reaching 2 minutes remaining. The setup froze at 2 minutes
remaining. After several retries, the same results. I have now tried last
known good configuration and safe mode - but each time it restarts the
Windows setup to complete the installation.

I am now at the point where the setup wont restart anymore. Now, after the
Windows Xp startup screen appears (black background with aqua blue progress
bar) the screen turns to light blue and I get a live mouse arrow that
responds to the mouse movements, but that is it. No explorer or desktop or
setup. The computer will stay in this state for as long as I leave it there,
all the while the arrow cursor will respond to mouse movements.

So in summary, I have an unfinished upgrade from Windows XP Pro to Windows
XP Pro SP 1 - and I get a light blue screen with a live cursor arrow on
startup.

Any help with this??