I ran into pretty much the exact problem. But I was still running build 1848...tonight, I wasn't able to boot into WinXP Pro. I didn't install any new updates or anything...it just stopped working. I went and installed build 1970 and surprisingly, i was able to boot back into WinXP. Something may have got corrupted..as soon as I got into Windows my Palm Hotsync program complained some driver was corrupt or missing. Have you tried reinstallin v1970? Good luck!
I tried going back to 1970 to get past the mup.sys problem. No luck, any version I try I get a BSOD in boot and safe mode doesn't work either. Financial information that I was about to backup once my external HD was delivered, never made it. UGH!