YES! :D
I figured out my problem,
After many trial and error sessions i went ahead and repaired xp after discovering i had a problem with the Cryptographic Service which is why fsx would not create the certificates. Right from the horses mouth,
Cryptographic Service
"Provides three management services: Catalog Database Service, which confirms the signatures of Windows files; Protected Root Service, which adds and removes Trusted Root Certification Authority certificates from this computer; and Key Service, which helps enroll this computer for certificates. If this service is stopped, these management services will not function properly. If this service is disabled, any services that explicitly depend on it will fail to start."
I hope this will help others whom are having the same problem as I. Although you do not have to go as far as a repair to fix the service here is a link for some other options. (that, unfortunently for me, found after the repair :evil: )
http://www.tech-pro.net/howto_014.html
Thanks for all of your help here,
Andrew