Constant Reboot

Please can you help? My friend has brought his works computer to me as although I am not technically minded, I have a little more knowldge than he.
The problem is that the computer will not boot up to the desktop in either "normal or safe" mode. It gets to part where it says "Applying Security Applet" then a box appears saying that "lsass.exe has caused a fault and windows will shut down". I removed the drive and set it as a spare in my own machine and ran AVG on the drive to no avail. (Someone told him he may have the "Sasser Virus", but AVG said that there were no viruses on the drive. I then put the drive back into it's case and switched the machine on, the result was the same (no boot). The machine is a generic pc running Windows 2000 with 256mb Ram. Can anyone help?