Win XP freezes after logo

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I was using Overnet last night and received a 'Backdoor.Blarul' virus warning from Norton AV 2002. Apparently this was a 'false positive', whatever that means, but I shut-down XP last night only to find out this morning XP won't boot-up past the XP logo.

I have tried to recover XP using the CD but after pressing F8 (for terms and conditions) I got a large unspecific error message.

Should I now reformat the XP partition and hope this solves the problem or are there further paths to take?

Thank you.
 
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