windows won't finish booting?

[avidgamr]

Okay, my first post.
I searched and didn't see a post with the solution to my problem so I'll post it.

BTW, I'm not new to spyware removal, been doing it for years for friends...
Anyway, I'm working on a friends computer. They had some nasties on their computer (you know, pop-ups galore, browser hijackers, etc.).

Okay, down to the details.

First, I unplugged the computer from the internet as always to keep them from re-installing themselves during reboot time.
Secondly, I ran two other programs in an attempt to eliminate the majority of the viruses and trojans (can provide details if needed- figured naming other progs might be a rule-breaker)

Then installed SpyBot S&D 1.60, it found (I think it was SpyBot I'm remembering) like 3000+ temp files it wanted to delete- I told it to delete them, closed it, updated it offline and re-opened it. Did a scan and it found like 15 different items. I told it to remove all of them and it replied that some had to be removed on reboot. Okay, no problem. So I rebooted.

Now there seems to be a problem, I think. When it reboots, I enter the pass at the logon screen, then it shows a (blank-no buttons or icons) blue background screen with my cursor over it (which I can move), hard disk mildly chatters for like 10 seconds and then does nothing else. Seems to be looping on something? Maybe I'm not allowing enough time for it to delete the files?

Anyway, more details I can remember... I can open the Task Manager. Nothing shows up under applications. There are some processes listed but I'm thinking they are just Windows processes.. I can reboot, logoff, etc. using the Task Manager but I never see the desktop come up. Booting in Safe Mode ends in the same result. I tried logging on to the other identity on the computer with basically the same results; stops at the wallpaper.

I do have and can use Windows PE. I didn't see anything off-hand to do (empty autoexec.bat & config.sys files, a few links to tmp files in the wininit.ini file which I added "nul=" to using Windows PE.

I'm stumped and in trouble for tearing up their computer...

Help! Please!

Window XP SP3 with like 512MB of RAM or something, IE7 I think (didn't open it), Dell computer (not that it matters), they do NOT have a restore disc so restoring is out of the question, I disabled System Restore when I began the adventure since I've seen System Restore automatically restore some viruses, etc before in my experience, so restoring to a previous restore point is not an option...

So to recap, Windows XP SP3 that stops on a blank blue screen after the logon screen and does not finish loading Windows.

[avidgamr]

BTW, I did try the "Last Known Good Configuration". It did the same thing...