System process at 100%

A friend brought me his computer complaining that its terribly slow.  After intstalling the latest Microsoft Critical Patches, his computer became unusable.  During boot up, just as the message "Applying security policy" appears, the system process pegs at 100%.  It will take the computer about 20-30 mins to get to a login screen.  Once you put your username and password in, it will take another 20-30 mins to get to a desktop but after that you can't run any programs.  I took the hard drive out and put it in another computer as a slave drive and scanned it with Norton Anti-virus, no virus was found.  I put it back in the original computer, removed all unneccesary hardware, no change.  I booted into safe mode and that doesn't make a difference, System pegs at 100%.  I don't know what else to try.  Any ideas?  Remember, I can't run any programs under Windows.