I dunno if i should post here or not cuz its a sorta old topic but here it goes:
No activation cracks worked because they are designed to crack non-activated, non-OEM copies of windows. My windows was not only a gateway OEM but it thought it was activated, yet at the same time it did not...?

Rather than dealing with this horrible loop error issue I found a friend who had a non-OEM copy of windows (he got it at best buy) and I burned a few copies for myself using a very old version of Roxio CD Burner (I find that the older ones tend to have higher sucess rates) I reformatted and installed windows using a burned CD (to make sure the burned copies work) and gave the original back to my friend. The activation went smoothly and everything is running great!

Hope this helps other ppl in the future who had my same problem.

EDIT: And D3r3k, (what a username...

) if your copy is non oem just google windows xp activation crack and choose the one that looks best.