Do a "tracert" to yahoo.com and a public IP address. Do both fail at the gateway address?

Try an Eset scan; http://www.eset.com/onlinescan/

Did you download Process Explorer as described in the page you linked to?

Unless it's a rootkit you'll see the process in the list.
...

The blue screen is most likely an immediate BSOD and the PC is set to auto-reboot in that instance. You need to recover an older registry copy ( http://www.aitechsolutions.net/winxpnoboot.html ) or...

Hit F8 repeatedly at boot up and choose Safe Mode or Last Known Good Configuration

Does this help? http://help.yahoo.com/l/us/yahoo/messenger/messenger8/webcam/mstacamsource.html

Does it stop any other services when this happens? System Restore no good? Any enlightening entries in the Event log?

Taskbar colour change - go into Control Panel/Desktop and ensure Windows XP theme is selected;http://www.helpwithpcs.com/tipsandtricks/changing-theme-win-xp.htm

If it is selected and you still...

Glad you got it sorted, & thanks to caperjack for fixing my link.

Looks normal, though I'm not a `trained expert` in HJT logs.
Why do you assume infection? Have you run a ChkDsk, an HD diagnostic from your HD manufacturer, a memory test ? Admittedly memory...

"The motherboard got a little burnt cos of the onboard LAN card" - physically burnt?

Note down the STOP error code and any file name mentioned when you get the blue screen(s) , they are most often...

ImgBurn will do that too

Use Process Explorer to see what each svchost.exe instance is doing http://technet.microsoft.com/en-us/sysinternals/bb896653.aspx.

Also, try disabling the DNS Client service if you have a huge...

As has been suggested previously in various posts, lack of memory (definitely), faltering power supply and/or failing optical drive are all possible factors. Failing hard-drive is a possibilty too,...

Latest version of Spywareblaster - v4.0, now fully Vista compatible. Goes on every machine I work on /regularly use. http://www.javacoolsoftware.com/spywareblaster.html

Vista tweaker - some way...

The title refers to Windows Services and there are quite a few of those. More info required - antivirus software, firewall installed, anti-spyware software, last scans with anti-virus/spyware...

Do you have your XP CD to hand? Run an in-place repair; http://support.microsoft.com/kb/315341

CCleaner? www.ccleaner.com