Gilly, have you restarted in Safe Mode? Or, is there a way to run the disc scan before even booting the GUI? I know almost nothing about ME other than what I've read: it's the worst of the ms bunch right now...

Better yet, boot from the scandisc CD and run things from there?

Best yet, upgrade to either Linux or FreeBSD? (not kidding at all, but i know this is probably unfeasible).

If you do a good disc scan, then run virus scans, AdAware, Spybot, use Mozilla instead of IE, and install ZoneAlarm's firewall, you might be able to have your system going well again. Best of luck.