I have a problem with a PC running Windows XP where it does not
recognise the keyboard.

It runs the found new hardware wizard and says problem installing
keyboard. Cannot create a file when that file already exists. Click
finish.

I need to know what I need to do to get the keyboard working again.
I then click finish then the PC tells me it has found new hardware,
then says new hardware is not XP compatible, then the found new
hardware wizard tells me again that it cannot create a file that
already exists, and so on in a loop.

Try to right-click on My Computer, select properties, click on the
Hardware tab, and click on Device Manager. Click the + sign next to
Keyboards (if it is there), right click anything listed in that
category and select uninstall. Reboot your computer and see if it
works.

If this does not, assuming you are using a USB keyboard, try moving it
to a different SET of USB ports on the back of your computer.

Good luck!