Riddled with viruses/Can't install anything

I've just been told that the family computer (which I don't ever use) seems to be riddled with viruses and is practically unusable. The problems include:

the desktop icons and start menu disappearing

the intetnet browser pops up to a blank white page with something along the lines of "whiteboy" and "hotsnake" in the address bar (disappears too fast to read the whole address)

a folder on the computer seems to contain literally hundreds of fake .rar files all around 1 MB in size

the computer currently has no antivirus software installed, and it seems it isn't possible to install any, as somehow the registry cannot be edited during installation (don't know whether some kind of virus is preventing it from happening)


The computer is running XP Pro with SP1. Due to previous hardware and software related problems, I had to do a fresh install of Windows a while back and never got round to putting SP2 back on it.

Whether these are separate problems or related I do not know, but don't really know where to start with trying to fix them. I've gotten rid of viruses, adware etc in the past, usually from following online help, but now the state of the pc seems to have gotten out of hand due to the people using it not being the most computer literate in the world, and not bothering to highlight these problems as they each occured. Also I don't really know what's been getting downloaded, installed etc and no one seems to be very forthcoming.

Thanks in advance for any help

Here is the HijackThis log:

Logfile of HijackThis v1.99.1
Scan saved at 22:52:38, on 13/04/2008
Platform: Windows XP SP1 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP1 (6.00.2800.1106)

Edit by chaslang: Inline HJT log removed. READ & RUN ME sticky not followed.