After reading the entire thread up to this point, my advice would be to buy two things:

1.  A genuine XP Home Edition license.  The least expensive license is called a systembuilder/OEM 
license.  It is cheapest because once installed on a computer it is not permitted 
to be moved to any other computer.  About $85-100 from legitimate online sources 
or local computer shops.

2.  A flash drive that is big enough to hold the data that you want to save from 
the existing installation.

How to proceed:

1.  Copy your data onto the flash drive.

2.  Insert the genuine hologrammed XP Home CDROM, restart the computer, choose to 
boot from the CD, and begin a clean installation.  A clean install with a full repartitioning 
and reformat will get rid of all malware and give you the best start.

Here's a tutorial with a step by step for a clean installation:
http://www.michaelstevenstech.com/cleanxpinstall.html

As appleoddity noted, with a generic system drivers could be an issue.  If you have 
that flash drive and another computer you can find out what kind of network adapter 
is installed (could be on the mobo or on an expansion card) on yours by looking in 
Device Manager before you do the clean installation, and download the most current 
driver from that network adapter manufacturer's support site using the computer that 
is not infected.  After the clean install, you install the updated drivers from the 
flash drive.

Once your network adapter is up, you can access the internet to get all the drivers 
you need.

BUT, the first place you should go is Windows Updates to get the zillion updates 
or service pack 3.  Then go to free.grisoft.com to get the latest free AVG, which 
I think you said you were using.

Once the computer is back up and running with the clean installation, make a second 
user account, call it AdminUser and make it a computer administrator account.  Then 
logon to AdminUser, go to the User Accounts applet in Control panel, and demote your 
regular user to a Limited User.  Operate the computer for daily tasks with the Limited 
User account and ONLY log on as AdminUser when the task at hand requires the prvileges 
of the AdminUser.  When that task is done, log off AdminUser.