A friend of mine has this problem with XP. The OS will only load the wallpaper with no start menu or icons. CTRL+ALT+DELETE doesn't work and I am unable to boot into safe mode. When I do try to boot into safe mode a funny thing happens when I click on the user account to login. The screen just flashes and takes me right back to the screen with the user accounts. I've tried using Last Known Good Configuration to no avail. I'm pretty sure that this was caused by a virus. Any other suggestions?

Have you attempted to identify and remove the virus? That's the first thing you should do. EEOC

How would I go about doing that if I can't even boot into safe mode?

Just do one thing.. is to put ur Windows XP CD.. and upgrade.. or put some google searches to recover the following filesfrom recovery console there is a chance of folowing files have been corrupted.. winlogon.exe userinit.exe or some virus have affected the registry keys of the above mentioned.. or just coonect ur harddisk as slave with other harddisk copy these files to ur harddisk it will be alright..