Further threats after reformat?

I've essentially given up on solving my malware infections the traditional way. I've been over the read and run thread multiple times but it really doesn't matter because my system is incredibly unstable and is crashing over and over again in both normal and safe-mode to the point where I can't complete any kind of scan. I've found evidence that many windows files have been corrupted and so on and so forth. Long story short, I'm reformatting.

I have two questions:

1) Firstly, how safe is it to boot up my current malware infested system and pull out what files I am unwilling to lose stash them on a CD or whathaveyou and then replace them after the reformat? Would scanning said files BEFORE reformatting serve any purpose whatsoever? After I reformat could I safely insert the CD and scan the files then without risking reinfecting myself?

2) I don't know if this is a myth or not, but I have heard in the past that in some cases reformatting a hard drive may not solve the problem, that the malicious little buggers will hide out somewhere and pop up again after I reinstall windows entirely. Is this at all true? If so is there anything I can do to just purge the whole damned drive or anything like that? Any other extra steps I should take?

Anyway, thanks a lot for any advice you all can give.