I was having this issue, but was able to run explorer in safe mode. I tried "fixing" the registry, replacing the shdocvw.dll and userinit.exe files in %sytemroot%\system32 and explorer.exe in %sytemroot%. I did this several times through several means.
For fear of giving the pleasure to some scriptkiddie for acknowledging a successful take down of my system, I'm not going to say which virus did it. However, I will say that it was a nasty little bastard. It took a lot to fix, but I did so through the following.
1. Remove the hard drive and slave it to another system. Run a virus scan on the hard drive and clean the infected file(s).
--The virus had successfully taken down my antivirus.
2. Run a full system repair from the XP installer disc.
--It took time to do, but nothing else would work.
3. Update your antivirus and scan the drive again locally.
Now that I've done all that, everything is back to normal except one thing; my internet connection. I have network connectivity, I just can't do anything on port 80 it seems. ICMP works, as do windows update, symantec live update, and network file transfer. It's probably something simple that I've overlooked, or it could just be that I need to install the drivers for my NIC/wifi.
Why someone would produce a virus that would render itself useless is beyond me. It would serve no purpose other than ticking people off. In this case, it worked. But TS, punk, you won't get the pleasure of knowing you succeeded.