I just tried a "Step by Step" bootup. All going well until I get to: msmouse.vxd then all stops.
Looks like the mouse is causing the problem. I am using my mouse from this computer which works perfectly. Will get my neighbour to fetch his mouse in when he gets home from work.
If that does the same thing then it looks like the mouse connection on the Motherboard could be faulty. I wouldn't had thought a mouse would stop a computer booting though. I have just tried mine without the mouse connected and it boots fine. Just that I have to use the keyboard shortcuts to be able to use it.