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Did it successfully boot from CD (to initiate install)? If yes, that suggests the hardware is ok.
I assume it did, since you attempted to copy the file ntoskrnl.exe across. In this case, have you tried a repair install from the CD? Essentially, this installs all critical files and validates the registry - if it's ok it is preserved. In this way, there is not normally any need to reinstall software.
Kaled.
You could have a loose connection to your keyboard internally. You should open up the case and examine the ribbon connecting the keyboard to the MB. (unless this will void a hardware warrantee)
Try using the repair function on the windows CD to replace ntoskrnl.exe in the system32 folder with [cd drive]:\i386\ntoskrnl.ex_ again. Maybe it'll work this time ;)
Run chkdsk to check for any errors on the drive. If chkdsk doesn’t run for you, you might need to download a drive utility that self boots. You could also check the drive from another computer if you remove the drive and use a USB case. Be careful though, sometimes a USB drive case will cause a delayed write failure and really screw things up.
If nothing above resolves it, your windows install is severely jacked up and you need to start over. You can try connecting the laptop's HDD to another computer through a USB drive case to retrieve your files before you wipe and start over.
Good luck!
[edited by: SEOMike at 10:08 pm (utc) on Sep. 26, 2007]