HELP NEEDED: Can't log into Windows XP, not even in Safe Mode. (after virus infection) [ Edited ]

[biedronal]

T2400(1.83GHz), 512MB RAM, 60GB 5400rpm HD. 

Computer was infected by virus: Antivirus.net.  Tried using Malware to remove in Safe Mode, and tried uninstalling Internet Explorer 8 (for a different reason).  This virus was nasty and I was having hard time getting rid of.  The last thing I had tried was System Restore to the oldest point that was available.  The computer restarted and now just basically goes through a loop of 1.) Blue BIOS Screen (STOP: 0x0000007B..... ) then the screen comes up for safe mode and none of the safe modes work, and last know good configuration does not work (and starting windows normally does not work).  Every time I try to log in to windows it starts to load for about 1-2 secs and then kicks back to the blue bios screen with the STOP message.. Can anyone help?  I do not want that stupid virus to be the end of my computer. 

Moderator Note: Edited subject to match content.

[lead_org Microsoft MVP Contributor]

do you need to recover any files from your computer?

[biedronal]

Need to recover files?  Would  be nice, but nothing too urgent.  

Laptop.  IBM Thinkpad.  Model# T60. Type: 1952-45U 

[lead_org Microsoft MVP Contributor]

there is an option to make a full factory restore in the Rescue and Recovery console. Have you tried that option, this will wipe everything and restore the laptop to the original condition.

[biedronal]

No I haven't. That option is in the BIOS menu somewhere?

[lead_org Microsoft MVP Contributor]

no it is in the Rescue and Recovery console, which you can access by pressing the blue thinkvantage button during the initial startup.