if your op system is not a pukka one, then you cannot properly upday you system... I know that the fix for the security threat from the blasterworm is available on service pack 2 on the XP update site, but if you put it on a hacked OS, it will notify Microsoft that you have a dodgy OS on your computer. I must be honest, and say that it sounds more like a trojan which has destroyed the windows registry files, and made the computer U/S...
Sorry to be so negative, but from what you have said, it sounds far more likely than just a worm...and if your antivirus was up to date, it would have lit up very screen on your 'puter, as the fix was available nearly before the worm had spread too far...
If you still have the latest Norton on your machine, there is a file recovery system on it... I havent used it, but give it a go, it cant make it any worse...
(famous last words)
Best of luck with recovering your info, and if you need any help, please let me know.
Best of luck,
Rolfy
ps... If the virus is still on there, do a complete format of the hard drive in dos, then re install windows.(and update it with all the latest updates-if you can)
pps...LOL, god dont I go on ??? dont forget to save all your system drivers (sound/graphics/modem/network/etc/etc)