Corruption of Master File Table

Source
[partial NTFS corruption following NDIS.SYS blue screen of death]

Symptom: Every time I cold boot the notebook, chkdsk will commence repair process. The screen displays ‘Inserting an index entry into index $o of file 25′ line after line until it said ‘Insufficient disk space to correct error in the index $o of file 25′. The Windows XP then allow me to logon but popup error message saying such and such folders is corrupted and unreadable. Some applications work fine but I noticed that while you can create/save file on C: drive, you can no longer delete nor change it. C: drive file system seems like being completely locked.

Answer A
Well repairing the partition is not going to help because the partition is intact. If the partition was not the drive would not boot. It sounds as if you may have some bad sectors on the drive. It was also interesting when chkdsk indicated that there was not enough disk space on the drive to reallocate index allocations. Sometimes it is best to get your data off of the drive to another media before it goes bad. So, that said, I would back up whatever important data you have to another drive ( external usb, DVD, CD etc ) Then I would check the amount of space used on the drive. If you disk is totally full I would delete whatever you can live without and uninstall any programs you don’t use. The run chkdsk again. If chkdsk can not resolve you problem then I would suggest starting from scratch.

Answer B
The problem exists with the file system itself and not the Master Boot record, or OS boot record. The Master File Table is corrupt and chkdsk is trying to repair. The situation with chkdsk is that it will destroy inodes and file pointers to the point where data cannot be recovered.
You sound like you may have one of two general problems. First, you may have bad sectors on the drive, and because they cannot be read it will show as a corrupt file system and chkdsk will try to run. Second, data was written to the MFT area of the file system and has corrupted the table. This can happen for so many reasons that it would not be prudent to list them here.
In order to solve this problem, I would pull the drive from the machine, place it in a USB sleeve and try to recover the data using DART for XP
http://www.dtidata.com/free_data_recovery_software/DART.zip .
If DART hangs then that usually means there are bad sectors on the drive, then you may want to use Speed Clone
http://www.dtidata.com/free_data_recovery_software/Speed_clone_Demo.zip.
To image the drive to another drive and then recover the data.