I tried the steps to repair it which was
-Enter repair mode
-copy userinit.exe to wsaupdater.exe in the "C:\Windows\system32\" directory
-exit and reboot
At this point I realise this might not be the problem even though the symptoms are similar because I get logged off again (however, i get to see the desktop picture for a slightly longer period of time i.e. 5-10 seconds). OR the malware overwrote the userinit.exe file with the wsupdater.exe?
-login and change the reg key back to userinit.exe since the malware changes it to wsupdater.exe
This one has got be buggered