Cmd & regedit can't run after PC hacked

Hello,

I'm a new comer here and please help to solve my pc problem (running XP Pro).

I found that my pc was hacked several days ago. I scanned and cleaned the pc with various anti-virus/advware/malware software like Kaspersky, AVG & lavasoft. Software patches have been installed as well.

Now cmd and regedit do not work but gpedit.msc, msconfig & command.com. The screen shows pure wallpaper for one to two seconds when I try to run cmd or regedit, then the normal screen comes back.

I searched for solutions online and installed VArestorepolicies.inf, fixswen.inf & UnHookExec.inf but the problem is still there.

Before following the advice found here to reinstall the system in a much more secure way, I would like to learn what has been happening.

The HJT log is attached (please forgive that there are some Chinese characters):
 
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