The Preboot eXecution Environment (PXE) menas that your system is trying to boot from the network (and is probably not configured to do so). You might poke around in the BIOS to be sure network boot is completely disabled if you can find it but it sounds like it is trying to boot on the CD (since you see the background), it is failing for some reason, then the system goes to the next boot option which is probably the network. Googling that error message gets some results that you may want to look at but I didn't see anything right away and can't reproduce that error.
You might see if unplugging the network cable from the afflicted system has any effect or see if it will work from the USB thumb drive.
You can see if you can boot on the Hiren's CD from the Windows 7 machine and load Mini XP. You don't have to "do" anything from Hiren's - just be sure the CD loads Mini XP, remove the CD and choose to restart from the Start button to restart Windows 7. Then you can at least be sure the CD is good and the problem is with your afflicted system. On my Windows 7, I booted from the Hiren's CD and the Hiren's USB thumb drive with no ill effects.
Sometimes if you can't figure out what the problem is, you have to figure out what it isn't.
I have had this one USB thumb drive for years and use it to carry files around (aka Sneakernet) and used Rufus to put Hiren's on it many times (for practice) and it still all works fine for other things after much use and maybe some abuse so I don't see how you can damage the USB device.
I have never used Ultimate Boot CD and their forums say they do not support the chkdsk program (since it is a Windows program) but there may be other ideas that I don't feel like trying but maybe somebody that has used it will chime in:
http://www.ultimatebootcd.com/forums/viewtopic.php?t=5345
This video says you can run chkdsk from Ultimate Boot CD so I don't know who is right: