Help needed reader_s.exe malware/trojan

Hello,
Im new to this forum so pls excuse any obvious mistakes in posting. I have seen the other reader_s.exe threads, but am not sure if they will help me.

I'd like to first explain what happened. I have a Dell 620 laptop, with a single partition (I never created multiple partitions, mistake #1) running XP. I have avast free version AV installed but nothing better (mistake #2). About 3 days back while connected to the net I probably downloaded something (through a download manager) which resulted in the infection (I don't remember running any .exes explicitly, except unzipping some files). I got a blue screen and on restarting Im getting strange behaviour:
1. XP logon screen was replaced with a win 2k kind of logon. Explorer was not running after logon, and I had to run it from task manager. Active desktop was disabled.
2. Found multiple instances of reader_s.exe, servises.exe (NOTE: not services.exe) and some processes like a.exe, b.exe, etc running.
3. I checked with autoruns to disable these processes which were being run at logon, but this resulted in a blue screen.
4. I was getting some Dell data protection messages earlier which prevented the Logon UI process from executing etc. I was trying to boot into the Last known good configuration. I managed to install and run mcafee AV, but it resulted in a blue screen after a while.
5. Now while booting Im getting a: STOP: c000021a {Fatal System Error} The windows logon process system process terminated unexpectedly with a status of 0xc0000005 (0x00000000 0x00000000) kind of message and blue screen. When I try Safe mode boot, or last known good configuration, the same happens.

Im not connecting to the internet with this laptop now as I read that this trojan feeds from the net. I don't think I am in a position to follow the instructions given in this forum for the Malware removel guide, Windows XP cleaning procedure, etc. though I have downloaded the .exes on another laptop - I have no way to install and run them on the infected computer.

I would ideally like to preserve and backup as much data (no exes) from the laptop as possible as I have important stuff there. What should I do?? Is it even possible to recover from this point? Pls help! I will follow all the steps as suggested to make sense of this problem, and to recover/salvage whatever I can! Im just cursing Windows, my luck and myself (for being so lax on security earlier), for such a thing to happen.

thanks,
-Vardhan