First, when you check the print spooler service ( I know you said it is set to automatic), have you tried to hit start to see if it begins? Also check the dependancies and make sure they are running as well.
If that is all squared-away, try this. Now, being that this is XP I can't remember exactly how to get there ( I use Vista), but I think you right-click on My Computer, select Properties, select Advanced, and go to the Data Execution portion. Select to turn on DEP, and then select add. In the box provided enter this: C:\WINDOWS\system32\spoolsv.exe
This has worked before, so it will be worth a try.
Spawn