I used to work for the geeksquad and have had this problem so many times ... simply loading barts offline reg editor and changing the userinit value back to C:\windows\system32\userinit.exe, sorts everything out.
Ran 6 virus scans against it (using GS MRI tool ... just like BARTS except with all the major virus scanners), major infection was TDSS but I was not able to find any .sys files ... only .tmp and no registry references to tdss so i think there was just some leftover files. Anyways I copied over a brand new userinit.exe from my computer and still no luck.
I used some methods to bypass WGA so there aren't any more notifications (could that cause the log in/log off?? I have never seen an unactivated version of windows cause this?)
What else ... system time if OK, nothing suspicious looking starting up, none of the adv boot options make any difference.
This is getting very frustration
Thanks!!