Windows XP Freezes on Welcome Screen

I recently was give a computer with a very annoying problem, it freezes on the welcome screen when booting into normal mode. I done all the virus and spyware scans in safe mode I've also disable some services and all of the Startup item. with then same results. The Virus and Spyware scans came up clean. The last thing the user had happen was Norton come up with a Virus warning upon further investigation it looks like the Virus definitions had expired. Anyway he clicked off the message and rebooted the computer normally. After the reboot the computer froze on the welcome screen and has been that way ever since. I've test the hard Drive and memory as well and both are fine. I've chkdsk. The computer is an ACER Aspire AST650-UP523H and has the original image image on it from acer. Its 6 months old. I'm at total loss at what to do with I'm trying avoid reformatting it if that's at all possible and it would nice to know how to fix it if run into again. Thanks in advance for your input.

Here is a good first step. If it does not help please report the results so we can advise further.

In Safe Mode go to start Run... and type: chkdsk /f

You will be told that the volume is in use do you want to run on reboot? Choose Y and reboot.

Tried it no change

http://global.acer.com/support/index.htm

If it is only 6 months old I'm sure you will be under warranty.

Although you might find further ideas here:

http://global.acer.com/support/download.htm

The warranty will not cover software issues and I've already ruled out a hardware problem. Thanks anyway.

I've narrowed the problem down to the Plug and Play service but I don't know what to do now.