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XP Defender has caused multiple problems

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This thread's last reply is from April 10, 2010, 11:21 PM UTC. Software, malware, and removal-tool advice below may be out of date — treat specific steps and download links with caution.

I've posted before and you've helped each time. Please, I really need help again. My daughter's computer was severely infected with XP Defender and the other names the virus uses. I downloaded Malwarebytes on a thumb drive and installed it on her computer. After several runs it was declared clean but the next day XP Defender popped up again. Now it appears that the computer has been cleaned but there are several problems:
1. The computer will not load in Safe Mode or Safe with Networking Mode. Instead it runs a Registry or list of files in msdos mode and then goes back to the initial screen (F8). It will load Windows in Debugging and Normal Mode.
2. Another website suggested I run regsvr32 and check various dll files. Shdoclc.dll is missing and Mshtml.dll will not register.
3. I cannot access the internet. She uses I.E. 7 (I believe) but no pages will load. I've tried rebooting the computer, disconnecting the modem and reconnecting, and making a new connection. I am able to Ping the modem and all troubleshooters say it is working. Her LAN connection shows it is connected and there are no problems.
4. There are several other problems that I can post but I'm not at her computer now and cannot remember them.

Before I attempt anything else I will await someone's assistance. Thank you in advance.
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