My IBM thinkpad T60 goes into standby mode when restarting. Normally happens when windows XP in about to start. When try to restart it displays preparing to standby. Keeps repeating the same when try to restart.

Sounds like problems with software. Can you boot to safe mode, enter power option settings and turn off the standby mode to test this?
If this fails, and you can access the Bios, check the hibernation/ power settings in there. i think there is an option to adjust the behaviour on reboot.

Failing that, and if you can find another hard drive, test the laptop using that one. It may be a fault with the hard drive being damaged and preventing booting. Also check the ram by swapping it out.

After that, I'd suggest getting another hard drive or re-installing windows on the old one, you can do an over the top install (saves existing files) if the info on the drive is important. to do this, wait until the installation prompts you to look for an existing installation of windows and repair at that point.

If none of the above, you have a hardware fault, that may be caused by a faulty switch (check the on / off switch is not sticking), or a fault on the motherboard