BleepingComputer.com: Vista Not Responding on Startup

I'm trying to help my friend out with a computer issue on his laptop, but I'm confused on how to go about solving the problem. Hopefully I can get some help from here. The issue is after Vista starts up and he logs in the computer freezes. The desktop shows up with his background, the menu bar is visible, and some of the icons on the desktop actually show up with their desktop icons and not just the blank default desktop icons. If the start button is clicked the mouse does it's loading spin thing and then the computer will fade to the faded out not responding look, but it just freezes there. Also, after logging in the keyboard doesn't work. (So, no Ctrl+Alt+Delete) . I ran the computer in safe mode and it works perfectly fine. I feel that this issue is not a virus (I'm about to run a scan on it. I'll let you know how it goes).

I would just run the windows disc and see if that would fix it, but he doesn't have a copy of it.

In my attempts to fix it I ran the system restore (rstrui.exe-> located in C:\Windows\System32\rstrui.exe) and have run msconfig and turned off any unnecessary services.

If anyone has experienced/solved this issue any help would be much appreciated.

Thanks.