Previously, when launching the Cygwin terminal, a console will popup and the line will say:
username@PCName ~ then a blinking cursor after $.
Now a blank console appears and nothing is on the console screen but a blinking cursor...
The shortcut seem to be directing to the right path "C:\cygwin\bin\mintty.exe -i /Cygwin-Terminal.ico -" so I don't know what's going on.
How do I go about fixing this issue? Do I have to look into the Environment variables? If so what do I have to look for?
I'm running Windows XP Professional x86.
Since you say it starts up successfully using cmd, it could a problem starting up you mintty environment. Try going into your home directory and deleting (back it up somewhere else if you want to be able to bring it back) the .minttyrc file and then try to start up again.
If that doesn't do the trick, try to go a little bigger and do the same with the bash environment files. Back up .bashrc, .bash_profile, .bash_aliases (if you have it) and .inputrc and replace them with the default sample files that are in the /etc/skel folder, then try to restart again.