The AVASoft virus has been removed :o)
I created the Kaspersky recovery CD following the instructions in rdave13's link using another computer. I booted the infected PC with the CD in the drive and the Kaspersky first screen showed asking me to press any key to enter the menu. I pressed various keys during the countdown but these were ignored and the infected Windows XP started again. I shut down then restarted again. This time the Kaspersky screen did not show at all and Windows started again. This virus seems to learn and protect itself.
Then something happened....
The virus program tried to access the internet and was identified as a serious threat by ZoneAlarm firewall. I clicked to deny access. Without prompting, ZoneAlarm started to scan and "treat" the virus. This took several minutes with 6 files identified, then ZoneAlarm forced a restart. On restart, AVASoft was gone! I didn't get to try any of the solutions suggested, but thanks to all.