Windows SP2 Problem, Very Odd

[StarWarsHater]

OK, this is prolly the wierdest problem I have ever encountered with updating (and almost windows itself)

System Specs:
AMD 2000+
768MB RAM
Asus A7N-266E (nForce1)
Radeon 9600p
M-Audio Revolution
Linksys NIC
80GB JBB
NEC 2510A DVD-RW

This box is totally off any network/internet.

So, after formatting (twice) and reinstalling I have this issue:
I install XP (totally legit CD with no SP1 or 2 on it), first thing I do is install SP2, reboot, nForce drivers, reboot, then all the other drivers, reboot. It is fine at this stage. I start installing my programs, here is the short list:

Programs:
firefox, trillian, zoomplayer, winamp, codecs (divx xvid ffdshow and a number of others) mIRC, foobar2000, gspot, ms office xp with frontpage, alchol 120%, nero, sonic recordNOW, infraview, girder 3.29, xplorer2

Games:
arcanum, Q3A, Doom 3, freespace 2, warcraft 3 with exp

All patched to lastest verisons and that except girder. All these programs are not on any "incompatability lists" in the Knowledge base.

All of these install fine, no problems, I restart and its fine. Went to bed at this time (2AM)
This morning woke up to the oddest thing:
I get to the welcome screen, log in and then it goes on and logs me in, however, explorer locks up, I don't get desktop icons, start menu, nothing. If I wait like a couple of minutes, it will bring up wallpaper, recycle bin icon, the right click on desktop menu, and even balloon tips, but no start menu (not even with the Windows key) or taskbar. I can use Win-E to bring up an explorer window to browse. However, I cannot drag and drop or cut/copy-paste in it. xplorer2 (it is an alternative file manager, but doesn't lock into your system at all, so explorer is still primary, you have to run it manually all the time, there is a reasoning behind this but I'm not going into that) has the same problem.

So, I try my luck at system restore and I get this: "System Restore is unable to protect your computer, please restart your computer and run System Restore again"
and of course following that doesn't work. Trying to use the MMC is a waste, I cannot bring up any properties box for the events in the event log or services.

So, after a little troubleshooting with a friend, get the idea to disable DEP. Adding all the programs listed up there, still no go. Hell, even added explorer to that list and no go. So try totally disabling DEP via boot.ini (as described by this -> http://support.microsoft.com/default.aspx?kbid=875352&product=windowsxpsp2 )

By selecting one of these options, you can exclude one or more applications or configure DEP settings for the whole computer. Setting the option to turn off DEP adds a switch to the boot.ini configuration file for the Windows installation that you are currently running. The boot.ini switches are as follows:
/noexecute – This is the default. DEP is enabled.
/execute - This disables DEP.

Try it, doesn't help.

Also, safe mode is a no go as well, as explorer does the same thing as described during a normal login (see above). Last Known Good Configuration doesn't help either.

So, I've stumped myself and my friend and looking for some serious help.

Thanks

[edit] I saw the Divx problem on their website, uninstalled Divx, no go. Also tried uninstalling SP2 itself, and I get "System cannot find the file specified." Awesome

 

[MOC]

http://support.microsoft.com/default.aspx?kbid=875355&product=windowsxpsp2kb

http://win-xp-sp.blogspot.com/

Recovery Console looks like the ticket for removing it..(SP2 that is)