Hello Rick
Before you do that, try booting the CD amd choose to repair via the Recovery
Console. Once in the RC, try giving the "chkdsk /R" command. That will scan
the HDD for errors and try to correct some other errors, and it will also
check the entire disk for sectors that might have gone bad. Anyhow, it could
be sasser or a variant because once logged in things run under the
privileges of the user even though the desktop is not yet being displayed. I
guess you'll find out, because even a reinstall (that doesn't involve a
reformat of the HDD) can leave sasser and some other virus still active and
you'll still have the same problem.

Do reconsider putting the HDD as a
slave drive into another NTFS type computer and running virus check against
it. The NTFS XP system is really very robust, it's amazing how long it will
still keep working (up to a point) even when terribly infected or otherwise
compromised or damaged. I see it every single day, that's what I do for a
living. Good luck, Rick.