Is there a new virus affecting boot sector?
"This weekend I have been fighting a horrible scenario where TWO of my computers (XP with AVG) went into an endless Restart-loop.
Both of them could not load Fail-safe mode.
Both could not boot from CD for a clean Windows install (even though BIOS was set to ""CD boot"" as the 1st, 2nd and 3rd option).
The final solution was to connect the hard-disks of both machines to my third machine (Windows 7, no antivirus) through a USB external casing, and formatting them. Once formatted, I could put them back into their machines, and only then I could get the machines to boot from CD for a clean XP install!
Last night I heard a friend having a very similar problem: (XP with AVG) went into a endless Restart-loop, had to reinstall XP."