If you delete the %systemroot%\Repair folder, you will not be able to:

• Install service packs.

  Service Pack Setup could not find the Setup.log file in your repair directory..

• Create an Emergency Repair disk

  Repair Disk Utility could not copy all files to the Emergency Repair Disk. One or more files were not found.

  Sam._ , Security._ , Default._ hives and the SETUP.LOG which are found in the Repair folder are missing.

The only solution is to do an inplace upgrade of NT.

See HOWTO: Recover from Deleting the Repair Directory and Setup.log