Re-install XP without reformatting the drive

Hello,
I have a Toshiba Satellite Laptop with 100GB Toshiba HDD running Windows XP HOME OEM. I didnt get a XP CD along with the laptop but a 'Recovery CD'. 2 weeks back, one morning I got up to see my laptop showing me the four options of Start in Safe Mode, Start in Safe Mode with Command Prompt..... Obviously choosing any of the options simply re-starts the lapptop and comes back to this screen. I inserted the 'Recovery CD' but it said that it will re-format the disc - this I dont want as I will loose all data.

Now I want to know how can I recover the data first from my hard-drive and then re-install/repair XP. I tried putting the hard-drive into a USB-IDE jacket and plugged into another Laptop to recover the data but the laptop said 'cant read from external drive'.

thanks in advance.