I think you're right. Rereading the first post certainly suggests that the "Windows Restore" CD is only a utility that restores an image file to the HDD. As a result, there isn't an ability to get to the XP Recovery Console to repair the
MBR, (since the Windows XP setup program doesn't run). Unfortunately booting to Linux, (for example, via a LiveCD), and deleting the partitions on the HDD won't restore the MBR, since it's not located in a partition, but rather at a Main Boot Record area in front of the first partition. As a result the MBR needs to be specifically targeted and updated.
There is a way to update an MBR in order to remove the GRUB code, and reinstall the Windows code, using a Linux LiveCD. It just takes a bit of command line work. It's covered for an Ubuntu (or Mint) LiveCD boot, at
this post, of
this thread, over at the Ubuntu Users forum.
Here's another explanation of the same process, but with a bit more detail added. If you have questions before you do it, please post them here, and we can always advise.
Another method, (which requires access to another Windows PC, the Windows XP installation files, an internet connection, and a CD burner), is to visit
The Ultimate Boot CD for Windows website,
download the latest UBCD4WinVxxx.exe program to that computer, and create a bootable UBCD4Win CD. (Unfortunately due to licensing issues, you need to provide the UBCD4Win installation program with the actual Windows installation files, in order to build a Windows bootable CD). You can now boot the problem computer with the newly created UBCD4Win CD, and run the
MBR Fix utility, which will restore the HDD's MBR.
FYI. It's always a great idea to have some form of bootable OS repair and recovery CD available, and up to date, for moments like this. In addition to the aforementioned UBCD4Win, specifically for Windows system, the following CDs are very useful to have on hand, (for Linux, Windows, and/or barebone systems);
The Ultimate Boot CD (UBCD)System Rescue CD
Good Luck..