Can a virus live outside hard drive?

I usually am helping my friends fix their computers' from virus and trojans, but this time I am stumped.

I have a non boot problem, where my computer reboots in a cycle over and over again. After all the usually recommended stuff ccleaner, virus scans, etc....I removed the hard drive and tried to boot with my SONY RECOVERY DISKS, and also I tried BART and my computer freezes immediately after BART starts.

I tried the same recovery boot disks in my other computer and they worked fine with NO HARD DISK.

I tried SAFE MODE, LAST CONFIGURATION, and even RECOVERY CONSOLE all to no avail. All that works is the BIOS setup screen and all looks OK in there.

Even with a NEWLY FORMATTED hard drive with nothing installed on it - I still get the freeze with BART. With or without any hard drive.

So - it seems to me that there is a virus somewhere in the computer OUTSIDE THE HARD DRIVE. Now I unplugged the computer, removed the BIOS battery, even the memory sticks, removed cable modem and waited 1/2 hour - and still no good.

When I install the first bad hard drive into another computer I can view all my files. When I boot it, the other computer goes into the reboot cycle over and over...but when I remove the bad drive the other computer restarts normally.

There just HAS to be a virus residing in my computer outside the hard drive.

Is this possible? Can I reset the memory to clear whatever it is? Because now my hard drive cant be booted from, and my computer is rendered useless even with another hard drive.