System restore was run and somehow the drivers for your mouse/keyboard may have been affected, it is possible you restored the computer to a date prior to the usb drivers being installed. If you let it boot and sit at the login screen for 5-10 minutes it might re-install those drivers and then you should be able to log back in. If you have an external mouse/keyboard (usb) you can plug those in and wait a bit. If USB is still not working, this also may be the cause of your touchpad problem, those all connect to a USB controller at some point generally. The same outside USB ports and internal are all on the same controller, if that controller has an issue, eventually all USB devices would not work, touchpad, webcam, etc.
Booting to any disc should not cause an error with the OS, you may have a hardware level issue such as a hard drive with bad blocks which could cause all of these symptoms. Try to get the computer booting again. I have instructions for another hardware diagnostic utility but that would require burning a disc again.
Booting to linux still might be the fastest way to figure out if this is an OS issue or hardware, or both. If the USB drivers are written to a bad section of the hard drive and are no longer readable, that might explain why the USB devices are not working, if this is the case, USB devices should still work in linux, if they do not work in linux either, you have a hardware issue with USB somewhere.
Can you give us more information about what happens when you try to boot to linux? What do you see on the screen? Any information might be useful, it might be freezing due to a hardware level issue.
Edited by zingo156, 12 January 2015 - 08:36 AM.