Hi,
A quick search on Google about "lsass.exe system error" reveals several possible scenarios. Virus/malware, damaged hard disk, registry errors etc.
Since you are unable to boot into safe mode or normal mode, I would suggest you try booting into recovery mode with the Windows XP CD.
But if I remember correctly the Aspire One doesn't have a CD/DVD drive, you can try plugging a usb CD drive if you have one.
If you don't have a USB CD drive, you can use a USB flash drive: Install Windows XP From USB Flash Drive.
Else, try this method: MajorGeeks Support Forums - View Single Post - lsass.exe failed to initialize....
If it fails, you have no choice but to format the hard disk. Use Acer erecovery console to restore it to factory defaults.
Detailed instructions given here: Acer Support: Frequently Asked Questions list for How to use Acer eRecovery



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Ash a.k.a The Evil Mod


