Very Frustrating Virus

Hello,

At this point I don't know how one of my employees got this virus, but it happened yesterday and I can't figure out how to remove it. I feel stuck. The computer is a Dell desktop using Windows XP.

It was one of those that disguises itself as a fake virus detection program.

1. it has blocked the usage of all virus protection software.
2. We can't access any files/locations (.exe). It says. "Windows cannot access the specified device, path or file". This obviously includes the registry.
3. We can't boot in Safe Mode because it blocks logging on. In Safe Mode it has changed the Windows Logon password, but in regular mode the password works to logon.
4. We can't entirely remove the password either becase of the "Windows cannot access the specified device, path or file"
5. We also can't use system restore.

At this point all I was able to accomplish was externally pulling out internet plug to get it unconnected from the internet, though I don't know what that did.

I have absolutely no clue what to do. I feel like I have no options. Any insight would be greatly appreciated!