A little bit of googling and quite a few options were suggested including reinstalling the OS (Nah, I was not planning to do that though). But this solution saved my day:
Windows Registry Editor Version 5.00
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\FontSubstitutes]
"MS Shell Dlg 2"="Tahoma"
"MS Shell Dlg"="Tahoma"
[HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Policies\Explorer]
"NoSaveSettings"=dword:00000000
Copy the above content into a text editor and save it with some name and make the extension as .reg - you can then double click this to set Tahoma back as the default font and get back the original Windows XP settings.
Or you can download the one I created from here.
Be careful with editing the registry, if you are not sure of what you are doing, i would advise you to take a backup of the registry before proceeding.