Need your opinion on something - malware or coincidence?

Hey guys, just picked up an Envy 17 last week, and everything had been going fine for days...until my wandering fingers lead me to download a few PC games off of newsgroups. I know, I know, this is risky behavior, but here's what happened;

I downloaded Medal of Honor, mounted the ISO, went to install, and as it began, it said "Please Insert Disk" (or something like that) and boom, blue screen. It was a Stop: 0x0000007E message, citing iastor.sys as the problem. From there, I could not boot into Windows, regularly or even via Safe Mode, as I got the blue screen every time. Being that I hardly had installed anything on my laptop, I just formatted after my attempts to replace the iastor.sys file with a clean copy did nothing to fix the blue screens.

So with Windows 7 Home 64-bit running smoothly again, I thought I would just avoid that release of Medal of Honor and download other games. So I went with Mafia II...same thing happens. First off, is there even malware out there that could so completely decimate your system to the point where not even safe mode is accessible? Is it so prevelant that I hit two in a matter of two days? Or is it possible but these installations are just somehow bringing to the surface an existing problem with my computer?

Again, I know some nasty stuff can be hidden in newsgroups downloads, but does this sound like the potential behavior of one? Feel free to judge and throw stuff at me, but if you can answer my questions as well, it would be much appreciated.