I managed to fix the issue however i must say this was the most insanely retarded bios issue that has ever happen to me. I tried to reinstall xp which resulted in a blue screen upon booting from the cd. Which should not happen if was a windows issue. So then i thought i would try one last thing and flash to 2004. To my amazement it worked and the system booted up all fine. This issue has to be directly related to 2602 and i recommend everyone to stay away from it because i flashed using a safe way and it caused me a whole day of headaches. Downgrading bios several times did not fix the issue so i dont even know why the last try with 2004 worked but I'm just going to stay with 2004 unless some mind blowing bios comes out that can give me 380fsb with less than 1.75nbridge. I actually had to use 1.85 in order to break that wall with earlier bios versions.
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