can I try to reinstall windows from the options screen?

the restore did not work

There may be an option that says something along 'Boot from last good configuration' you can try that.

Yes, and i would try that a few times. If you can't boot in safe mode, then there is a bigger problem. Do you have any system restoration CD's? (i'm guessing not) Most Dell computers with xp did not come with them.

just tried safe mode .. it pulled up a bunch of files and then went back to blue screen

INTRODUCTION
This article describes how to perform an in-place upgrade (reinstallation) of Windows XP. This is also named a repair installation. It reinstalls Windows XP to the same folder. You may want to perform an in-place upgrade if your installation of Windows XP must be repaired. Such a repair installation may be required if one of the following conditions is true:
• You cannot start Windows XP in safe mode.


(snip)

Method 2: Repair install of Windows XP by starting your computer from the Windows XP CD
To reinstall Windows XP by starting your computer from the Windows XP CD, follow these steps:
1. Insert the Windows XP CD into your computer's CD drive or DVD drive, and then restart your computer.
2. When the "Press any key to boot from CD" message appears on the screen, press a key to start your computer from the Windows XP CD.

Note Your computer must be configured to start from the CD drive or DVD drive. For more information about how to configure your computer to start from the CD drive or DVD drive, see your computer's documentation or contact your computer manufacturer.
3. You receive the following message on the Welcome to Setup screen that appears:
This portion of the Setup program prepares Microsoft Windows XP to run on your computer:

To setup Windows XP now, press ENTER.

To repair a Windows XP installation by using Recovery Console, press R.

To quit Setup without installing Windows XP, press F3.
4. Press ENTER to set up Windows XP.
5. On the Windows XP Licensing Agreement screen, press F8 to agree to the license agreement.
6. Make sure that your current installation of Windows XP is selected in the box, and then press R to repair Windows XP.

Note If Windows XP was preinstalled on your computer, and you do not have the Repair option, contact your computer manufacturer to make sure that you have the installation CD for a repair install.
7. Follow the instructions that appear on the screen to reinstall Windows XP. After you repair Windows XP, you may have to reactivate your copy of Windows XP.

http://support.microsoft.com/kb/315341/

Reinstall all updates to Windows

After you perform an in-place upgrade or repair installation, you must reinstall all updates to Windows. To reinstall Windows updates, visit the following Microsoft Web site:
http://windowsupdate.microsoft.com

Reinstall Internet Explorer 7
When Windows XP has been repaired and is running correctly, reinstall Internet Explorer 7. To reinstall Internet Explorer 7, you must have the Internet Explorer 7 installation package. This installation package may still be on the computer from the first time that you installed Internet Explorer 7. Locate the installation package in the folder in which you saved the files.

Note This package may be located in the Temporary Internet Files folder. If you cannot locate the Internet Explorer 7 installation package, visit the following Microsoft Web site to obtain this package:
http://www.microsoft.com/windows/ie/downloads/default.mspx

To connect to the Microsoft download site, you must have a functional Web browser. If Internet Explorer 6 does not work on the computer after you uninstall Internet Explorer 7, you cannot download the Internet Explorer 7 installation package. Therefore, you will have to use a computer that has a functional Web browser to download the Internet Explorer 7 installation package. Then, use a shared network drive to install the program from the downloaded installation package on this other computer onto the repaired computer. If you cannot use a shared network for this purpose, copy the Internet Explorer 7 installation package onto a CD on the second computer. Then, use this CD to install Internet Explorer 7 on the first computer.

You could also do this-

Go out and get yourself another hard drive, install it into your computer, and install Windows onto THAT. That way, you'll be able to get at your important stuff on the offending drive. Sure, it'll be a bit more expensive, but you'll at least be able to salvage something, which you wouldn't be if you were to reinstall Windows onto your problem drive.

And yes- I've got a feeling that all the installation repairs in the world won't keep you from doing a complete reinstall of Windows. In fact, I wouldn't be surprised if something else was afoot with the errors, like bad sectors or some other hardware issue that is showing up as a software problem.

UPDATE:

Duane (Fear) walked me thru putting Windows XP back on the computer, but I've been advised that the infected files are still there beneath it all ... lurking.

I used to get a message that something was replaced by something else and did I want to go back to the original but I never knew how to do that. This person says I'm doomed.

He wants to use Secure Erase on the pc and then take it from there. I read an article on secureerase. Sounds like it's hardcore KILL on your hard drive and then rebuild?

Anyone familiar with that? I would really like to wipe everything clean and start over ..

*sigh*

Try out a couple of things before you completly kill the harddrive, what we did last night should have completly erased most files on the drive. I really don't think there is much threat on your system right now. However to be on the safe side do a scan with TrendMicro Housecall: http://housecall.trendmicro.com/ (Use the Java-based one and you may have to allow it to install)

Now if that picks anything up I want to see if Smitfraudfix will work to alleviate the problem: http://siri.geekstogo.com/SmitfraudFix.php (Scroll down for instructions on how to use the program). After that if you continue to have issues I want to see if ComboFix will help any: http://www.bleepingcomputer.com/combofix/how-to-use-combofix (Scroll down a bit for download locations, and instructions on use [the entire written instructions are not important, just up until you get the program running])

**IMPORTANT: Both Smitfraudfix and ComboFix need to downloaded and saved onto your Desktop in order to work properly. YOU MUST RUN THESE FROM YOUR DESKTOP.

Just want to thank all of you who posted on here to help me.

You all rock

I shoulda just taken it to a tech, cuz I have minus zero patience with computers and I've been pissy all day just cuz I spent all day yesterday trying to fix it.

Computers + me = OIL + WATER

Did you get it worked out?

Judging by the amount of replies and the size of the headache, I'd re-install Windows.

Need the data? Re-install it to a different folder i.e. WinXPnew, and ensure that your "Computer Name" and the "Owner" are different to what you set last time.