Win XP systray icons cut out can dialer and Vundo virus

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Working a friends pc I have came across a situation where systray icons are missing. They are cut out in rectangular fashion. The desktop background (color base) can be seen through the rectangles. Nortan Antivirus 2008 displays that Vundo virus is on pc. I went through manual steps to remove though regestry entries did not match what was displayed. In fact None matched. I downloaded the removal tool through Symantec ran which came back saying that it is no longer there. firewall displayes diler download blocked attempts constantly. This happens in ANY administrator account even new accounts created. Task Manager will not open. In limited acounts icons are present blocked firewall as described above continues. In order to get some funtionality I desabled all services excluding Antivirus via msconfig. This was only way to operate antivirus which found apx. 26,000 threats (I know ridiculous) Antivirus now says threats were remvoed though problem is still there. In Administrator accounts antivirus fails to operate at start up and threats get replaced. At whits end. Any suggestions as backup cd's where stolen. No os disk availible. System restore was turned off.
 
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