XP boots to black screen w/ mouse pointer

I am running XPPRO SP2.
When booting my PC, it does normal startup except when the two options to start windows or start the Windows Recovery Console comes up it flashes past this very quickly. The normal Windows XP Pro screen comes up but then a white broken bar appears across the bottom of the screen and gradually becomes solid like a progress bar. It then goes to a black screen, the HD chugs along and finally the mouse pointer and that's it.

What let up to that was I was online and may have picked up a virus. When launching a graphics editing program I got the info box that MS Office was being installed and needed a CD. I'd cancel and it's keep coming back. Also the graphics prog would load but with errors and locked up.

Finally I rebooted at the first several times it would show the error Isass.exe failed to initialize. After several attempts that went away and now just the black screen with the mouse pointer.

I have tried using the Windows CD to run recovery to no avail. I have reinstalled WINXP. No joy. I have down loaded and created both the Avira Rescue disk, no joy and the UBCD411, same result. UBCD411 is obviously not intuitive but I had a MBR issue in the past and tried some of the utils for MBR issues... no joy.

Please advise on next steps and thank you very much for the service you provide.