Hmmm. You have to be carefull here. One wrong step and your data is toast.
I would:
1. Remove the laptop drive, and use an external enclosure to copy all of the data elsewhere. (A cd based WINPE system to network can do this too)
2. Run a data checker over the HDD. Looking for bad sectors or corrupt files. If this fixes some, reboot and hope. You can use the XP Recovery console to run a chkdsk if you have no other tools.
3. Try a NORMAL XP boot disk install - doing a Repair over the current installation. Reboot and hope.
4. Format the drive and start from scratch - Use the Notebook reinstall disk.
5. Get your cheap ass boss to pay an expert to save his data and maybe the notbook install. :P (Last resort for most)
There are always unknowns with this kind of issue. The BTHIDbus.sys error is not that usefull, often with these errors it is the NEXT device that fails - the system freezes before it can report what it was doing.
Good luck.