Dear Clementine,

The problem was all in the registry..and with a faulty registry no new XP installation would work due to the same error messages on start-up...the messages were saying that a driver couldn't be found and/or that i should run an anti-virus before attempting to install....I was afraid I would have to wipe or replace the registry and lose everything..but then I tried Panda's on-line trojan scanner and it deleted what the Bitdefender and TrojanZapper couldn't and isolated the bug within the restore drive [this bug replicates itself and inserts a new entry into the registry everytime you try to delete it ]
Once it was in the restore files I left it there and downloaded two freeware [!] programs Registry Protector and Registry Freeze both of which analyze your registry and notify you of any program which is attempting to change an entry...blocking it in the meantime..thus stopping trojans in their tracks.
It comes on at start-up and flashes when a virus or program wants to make a change. Took me about two weeks of me denying permission to these changes at start-up and then..one day 'Voila!' the bug died or became inert..and the next time I ran the on-line Panda scan it deleted every virus and gave my PC a clean bill of health...I ran two more scans [trend-micro..bitdefender]..and they gave me the thumbs up, too.

After which I immediately set a new 'restore point' ..downloaded XP SP2 again from microsoft's website..and got a clean install.
Then I went to the mozilla site and downloaded the new Firefox browser [firefox 1.0] and for the last few weeks I have been absolutely bug-free.
;-)
So again..4 simple steps which worked for me:
#1..use Panda on-line trojan virus scanner... [by far the best against these bugs]..
#2..Download and install Registry Protector or registry freeze [both excellent prog's]..then
#3 ..update XP service pack with SP2 if you haven't already
#4...when you are satisfied that your sysytem is as clean as you can make it set a new system restore point...and DO try Firefox which will eliminate a lot of ActiveX vulnerabilities while still giving you maximum browser capablility.

Hope this helps..
-Sincerely
-Zohar