BleepingComputer.com: Initializing Windows (0x0321) constantly reboots

On this HP G72 RMN HSTNN-F03C Product XH002UA#ABA laptop with Windows 7 Home Premium ver 6.1.7600 I have already run Windows Factory Restore 5.2h ( Build 21.17794) from another hard drive partition twice, same result both times, Initializing Windows (0x0321) then laptop reboots continuously, even let it do this for 3 hours, plugged into a working network. Ran all available hardware diag, one set took 5 hours and passed, the other one that runs continuously was run for over 6 hours and passed. It will boot into safe mode with networking fine, downloaded AVG Free 2012 and it installed, but said it had to reboot to finish installation. But the AVG program does not show up when booted back into safe mode. Still reboots continuously. I did get into Windows 7 for about 6 to 10 seconds and was able to verify that it thought the battery was 100% charged, so it's not because Win 7 thinks battery is too low (and have had power supply plugged in the whole time). Two other things I have done that haven't helped 1) went to c:\windows\winsxs and tried to delete pending.xml but it's not there although there was 10,263 files! & 2) renamed c:\windows\SoftwareDistribution to c:\windows\SDold. HELP! I have a Windows 7 Recovery CD but don't know what I should do. Howard