Can't get past splash screen

A friend's laptop recently went faulty so he decided, as it's 7 years old,
to treat himself to a new one. However, he needs a couple of things off the
old one if at all possible, so he brought it to me.

It boots, completes the POST OK and then shows the Windows ME splash
screen - but gets no further, no matter how long you leave it. Pressing the
"Esc" key to get rid of the splash screen and see what's going on reveals
the following text:

"Please wait while setup updates your config files. This may take a few
minutes".

After about two minutes, it shows:

"Windows could not upgrade the file %1 from %2
%1: %2"

and that message repeats at two minute intervals for as long as you leave
it. Any ideas what's wrong and how to get past it?

Thanks in advance,

John