Sounds to me like your explorer.exe isn't fully loading. If you just re-install windows without formatting, it should boot up. Once it boots up I recommend using a variety of virus scanners, as well as some spy/adware scanners.
Here are some tools you can use after re-installing windows.
http://www.freeav.com - In my opinion the best AV I've ever used. Low resource usage, more effective than the "mainstream" AVs.
http://www.lavasoftusa.com - Download Ad-Aware SE. Spyware & adware detector and eliminator, best I've used.
Also do an online scan or two. If you go to google.com and search for "FRee online virus scan" you should get a few good results, like Pandasoft, for example.
Let me know how it works out.
NOTE: Wiping your harddrive would eliminate EVERYTHING, including your operating system. Re-installing can save you a few steps and a lot of lost data, assuming you do the proper scans afterward. It's a good idea to scan everything you download before using it, there are all kinds of malicious files you'd never expect to be hit with.