help please!!

A friend of mine has a computer that has windows XP in it......It was originally a HP Pavillion 500 but the motherboard was changed. It is about 4 yrs old. Well she said about 3 months ago her homepage started changing on its own.....which to me would be spyware. Then about a week ago her cd rom quit working and the light stayed on all the time and wouldnt open. Then it wouldnt let her on the internet and all this time it was getting slower and slower. Well she uses Norton but I had her go to Panda and do their activescan. It found a whole lot of spyware and hijacking tools plus two viruses. It disinfected the viruses but couldnt do anything with the others. Well she brought her tower here and when we hooked it up and went into the bios screen it is saying the primary master is USER and the secondary master is not install which is where I would imagine the cd rom would go. well after x'ing out of there and windows starts the keyboard and mouse both stiop working. By this time I have a headache. I restart the computer the lights flash on the keyboard but when windows start neither mouse or keyboard is working again. So I really can't get into anything to check anything. Please help me..........I am so confused and everyone is telling her to just scrap it cuz it is fried. None of this is making any sense to me.....I know spyware can screw up ur computer but is that all it is or is something major going on here?