I found another posting on this topic but it was from 2005.

I am working on a computer for a co-worker. It would boot directly to a blue screen. I removed the drive and did a virus scan with AVG Free and Adaware. It found "15 viruses" and removed them all successfully. Now when I reinserted the hard drive and booted it goes successfully to the multi-user log in page. I select a user and it begins to log in then says saving settings and logging off and returns to the multi-user log in page. This same process happens no matter if i log in with any safemode option, last good configuration, or start normally.

I already tried the whole command in recovery console

COPY USERINIT.EXE WSAUPDATER.EXE

the wsaupdater.exe file is not listed in the directory from what i can see. I am assuming that there is a newer malware program causing the similar issue. Please let me know if there is a different .exe I should be looking for.

Don't post at multiple forums.

You have posted in the Windows XP forum, if they think it is malware then I will re-open this one