Additional info: I marked drive dirty using fsutil and re-booted. No
success.

Thanks.

"chkdsk was scheduled to run manually at the next re-boot"
If it is set to start manually and you don't start it nothing will
happen.

Plugin in your windows xp cd and chose to boot to it.
When the welcome screen appears where you have to options of install,
repair and exit chose repair and you'll be able to launch the chkdsk
command manually from the recovery console.