Get access to a Norton SystemWorks 2002 or 2003 Pro Disk and insert it in your CDRom drive, make sure your CMOS is set to boot from CD as the first boot device (if it's not, then change the boot order), allow the NAVW program to run (anti-virus), I cleaned the W32Bugbear@mm virus from an XP machine acting just like this 2 day's ago. After that re-boot and launch the utilities from the CD, Run Disk DR. w/ the fix errors box checked (it may require a repair to be launched after a re-boot in XP (did for me as a start-up file installed by the virus was the culprit not allowing it to boot past the start of the unknown file action). That's OK, just re-boot & allow the repair to complete first). Then run Win DR. and affect (allow) Win Dr. to "make all repairs."
Then just try to boot up normally, going to Safe Mode first if it asks or gives you the option list. Then shut down normally using Start>Shutdown and re-booting again in Normal Mode this time. (Important: Don't forget to re-set theboot order in CMOS if you had to change the order to get it to boot from CD to use the disk to boot - Writing down the existing order first can only help later).
Good Luck.