Windows XP Infestation

A friend of mine recently came up to me stating he was having problems with his computer, and that it wouldn't allow him to do anything. I've had the computer for 2 days now, followed the sites instructions on how to clean a computer, and am still at wits end with this thing.

The OS is Windows XP SP3(32-bit)

Symptoms:

-The desktop is cluttered with porn site shortcuts, these reappear after being deleted.

-The C:\ drive has folder names with names such as 484bafe4f17c2ed71a and other such gibberish.

-In these folders malacious files are pretty apparent with such things as: $shtdwn$.req, mrtstub.exe, baseline.dat, DeleteTemp.exe, and the whole list of .DLL files.

-The virus, visually, is in the form of a Anti-Virus Protection program, asking me to scan the computer, and furthermore taking me to sites where I can pay for a full version of the software to remove the files. (Pictures taken from a digital camera are uploaded of this)

-Programs such as Malware Bytes, Spyware Doctor 2010, and SUPERAnti-Virus either crash, don't completely start up, or do nothing when trying to install/run.

I would upload files from that computer but I'm really afraid to share or connect this thing to the internet due to the level of this virus.

Any help out there?