cannot log into xp normal or safe mode

It all started when my mouse stopped responding and during subsequent reboots, I would just get the windows loading screen forever and never get past it.
I have xp home edition and its a custom built system. Let me know if you need any other specs.
i tried using a different mouse initially but didnt help.
I've reseated the hardware, checked all connections.
I cannot even load into safe mode. I get the option, choose it, and it begins loading all those necessary drivers and then just stops at some driver (I cannot remember which one...I am at the library writing this). It always does this.
I tried using last good config.,,,nothing.
When starting Windows normally, it just hangs at the loading screen with the little moving bar.
I re-installed windows (I have two drives; I reinstalled over Windows on the drive that had windows); ive tried repairing Windows; I then formatted the drive with Windows and tried a clean install and it hangs at the same point. What is going on? Is it a bad driver, bad hardware?
Thank-you