Lsass.exe error

Hello,
Just earlier today, my sister's computer began throwing a little malware warnings at her. It was named the same thing that rarely appears on my computer, so I just told Avast to delete it as always. The bad thing was though, as soon as the real thing went away, it repeated the malware message as an obvious false positive. It wouldn't let me do anything since these random false positives just began reappearing every four seconds. In desperation, I held down the off button and shut the computer down manually. After about a minute, my sister turned it back on, but before the Desktop could appear it went to a black screen and said Lsass.exe application failed, press ok to continue. I clicked it, and the same message popped up again. After pressing ok again, the screen went black and only the mouse worked. I have searched the internet for a similar problem, but everything I found related to the Sassers virus of which I know not to exist on her computer. The computer had just returned from the store and had very little installed onto it. She had not downloaded or installed anytyhing, and any and all Sasser virus symptoms are not there. It was working fine this morning, and we are hoping not to have to factory reset it again. It is a Windows XP Media Center edition. Thank you.

Safe Mode fails and so does Task Manager.