Yeah, it looks like the boot up sequence has gotten corrupted somehow, be it a virus or something else.
I'd suggest, as Simon said boot off the Windows CD and go into the recovery console. Its pretty straight forward to use - but you have to have confidence I guess.
It does seem odd to me that it just craps out, out of interest if you boot from the Windows CD does it actually go into the recovery console or does it just crap out, would tell us if its an hardware issue as well. Let us know if it does actually boot and I'll look at some more detailed instructions, but it really does depend on what's going on. It could simply be the master boot record, but it sounds as if you are presented with options to boot from in windows. At the very least I'd boot of the recovery cd, hit R and run a disk scan:
CHKDSK - scan to repair corrupted disks and files, especially if the computer cannot be started properly. This is the key command and will fix any issue, but you won't lose data, unless of course it is already lost.
Is the data backed up at all? If not you should be able to boot of a Linux Live CD too, we can go through this later too.