Which bootloader, the Windows one used by WUBI with just two lines or grub
that comes with Ubuntu and has multiple lines? The Windows bootloader can be
fixed from the Windows CD, but don't count on it to recognise Ubuntu. You
can edit it manually. It is just text file called Boot.ini. However, you may
have to do some reading up on how to add the loopback for WUBI.

The little I know about bootloaders is restricted to grub. I haven't read
enough about how the wubi installation boots or the windows bootloader to
help you there. It will cost you more in time and pain to try and trouble
shoot the bootloader than to do a fresh install, but don't be afraid to try
it if it's something you're interested in learning about. You just have to
be willing to put hours into it and you have to be prepared to make mistakes
that are non correctable. In other words, make a complete backup of your
entire system and data that you know you can restore from in case you make a
catastrophic mistake.

But first a few questions:

You said the system boots into windows? That would mean the bootloader is
working, so it's just that the option to boot into ubuntu is gone?

Do you have /home on a partition of the physical disk or a virtual disk
file?

By "regular installation" do you mean repartition the physical disk and set
up to dual boot?

How much free space do you have on your hard disk?

Are you comfortable on the command line?

Please try to be as specific as possible.

When I have used WUBI it changes the Windows bootloader. When you re-boot
you get a two line B&W screen with Windows as first choice and Ubuntu as the
second choice. That is the Windows bootloader. Then after you choose Ubuntu
you see grub, where you get kernel choices with Ubuntu being the only
choices.

There probably is a way to fix the bootloader. That post on ubuntu
forums that I linked way back wasfrom a thread dealing with resolving
the specific error message you reported. However, since step one
of any solution to fixing your bootloader is going to be mounting the
Wubi partition, best to back up important stuff before you go any
further.