Cannot login after updates installed

Can you login to safemode?

If you can, try a system restore from there.

Failing that it sounds like you may have to rebuild the machine from scratch

see if this is you. also try unplugging everything you can. usb plugs, printers, drives, cameras, firewire stuff.
Microsoft Knowledge Base Article - 294427

Windows XP Stops Responding at the Welcome Screen
View products that this article applies to.
This article was previously published under Q294427
SYMPTOMS
When you restart Windows XP and the Welcome screen is displayed, your computer may stop responding: neither the keyboard nor the mouse work. When you restart your computer again using the F8 key, you may receive the following error message:

System restart has been paused:

Continue with system restart.
Delete restoration data and proceed to system boot menu.
CAUSE
This problem can occur when your computer enters into the Hibernate mode and accesses a corrupted memory snapshot.
RESOLUTION
To resolve this problem, select the Delete restoration data and proceed to system boot menu option which enables the computer to perform a normal restart, instead of performing the restoration process while the computer is in Hibernate mode.
STATUS
Microsoft has confirmed that this is a problem in the Microsoft products that are listed at the beginning of this article.
MORE INFORMATION
The Hibernate mode is a Power Management mode which can store the state of your computer in its primary mass storage device. The Hibernate mode is useful when you leave your computer in Standby mode for an extended period of time.

Seen this exact problem once before. If you can't get into the machine in safe mode you will have repair the XP installation.

This will remove all Service Packs and Updates from your machine so you will need to reinstall them all. IT DOES NOT DELETE ANY OF YOUR FILES, PROGRAMS, USER SETTINGS, ETC.

Boot from XP disc - Change BIOS settings to boot from CD first , press any key when prompted.

Press Enter to install XP

Press F8 to accept license agreement.

Press R - to repair XP

You will need to re-enter your product key and re-activate windows before you will be able to log on - so dont do this unless you have the product key handy.

You can also use the recovery console to uninstall the the service packs so you wont need the product key or to reintall all other updates. but i can't remember how to do this off the top of my head. If you need instructions on how to do this let me know and i'll find them and email to you.

If you can boot into safe mode, go to "Add/Remove Programs" and try to uninstall the updates that had been installed (Should be close to the bottom, windows XP xxxxxxxx).