Procedure entry point EncodePointer could not be located in kernel32.dll

Yes, EncodePointer was introduced in Windows XP service pack 2, so it is very likely that the reason the software is not working is that you do not have this installed. However, this doesn't mean you need to hook the computer to the internet.

Instead, use another computer to download service pack 3 and put it on CD or USB stick. Copy it to the hard disk of the target computer, then run it. You probably don't need any of the other updates.

(Note: ignore the bit on the download page that says "This installation package is intended for IT professionals ... please visit Windows Update". In this situation, this package is the simplest way of installing the service pack, even for a single computer, and the process isn't particularly difficult.)