I think I may be having the same problem, but I also have csrss.exe running which is robbing a lot of my CPU percentage.
I have yet to solve it. But I wanted to know if you have some of the same problems. I am only able to run in Safe Mode. I cannot backup or move and files from one directory to another. I can delete files once I find suspect ones. But they reapper once I restart. It has also infected my other computer since i had tried to use a memory stick to swap files before the computer was restarted. Restarting seemed to activate the Trojan or Worm. What I can't see is the search function in Safe Mode Win XP Media is the dog only and the rest of the search area is blacked out.
The second PC doesnt show it as bad and I really dont mind doing the whole reformat and reinstall thing but I, just trying to save my important documents and pictures before resorting to that.
If I start windows in regular I get the the normal Win Xp media load screen and it BSOD. If I try Safe Mode with networking I BSOD. And debuggin mode also BSOD. I will add the exact errors when I get home. But do you have any of these same symptoms?