windows xp registry error at startup, can't install service pack 3

I am trying to save this computer because my parents gave up and bought a new one and gave this one to me. They had to reinstall windows xp about every two to three weeks because it would crash and go to a BSOD. They were also unable to keep service pack 2 on here for long. I know the computer has had viruses in the past and I think there may be problems with some leftover and/or registry errors. When I start the pc I get an error message stating: (Windows- Registry Recovery: One of the files containing the systems Registry data had to be recovered by use of a log or alternate copy. The recovery was successful.) I was successful in installing service pack 2 about a week ago but I fear a crash will be coming in the near future from it. Also tried installing sp3 today and got an error message telling me that I couldn't. Below is the HJT log. Thanks for your help.

Logfile of Trend Micro HijackThis v2.0.2
Scan saved at 4:48:09 PM, on 2/27/2010
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v8.00 (8.00.6001.18702)
Boot mode: Normal

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\Program Files\Java\jre6\bin\jqs.exe
C:\WINDOWS\system32\wuauclt.exe
C:\WINDOWS\Explorer.EXE
C:\WINDOWS\system32\wscntfy.exe
C:\WINDOWS\SYSTEM32\USRmlnkA.exe
C:\WINDOWS\SYSTEM32\USRshutA.exe
C:\Program Files\Common Files\Java\Java Update\jusched.exe
C:\WINDOWS\SYSTEM32\USRmlnkA.exe
C:\Program Files\Messenger\msmsgs.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Spybot - Search & Destroy\TeaTimer.exe
C:\Program Files\TRENDnet\TEW-624UB_TEW-644UB\WlanCU.exe
C:\WINDOWS\system32\wuauclt.exe
C:\Program Files\Mozilla Firefox\firefox.exe
C:\Documents and Settings\Justin\My Documents\Downloads\HijackThis.exe

R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = http://go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKCU\Software\Microsoft\Internet Connection Wizard,ShellNext = http://windowsupdate.microsoft.com/
O2 - BHO: Java(tm) Plug-In 2 SSV Helper - {DBC80044-A445-435b-BC74-9C25C1C588A9} - C:\Program Files\Java\jre6\bin\jp2ssv.dll
O2 - BHO: JQSIEStartDetectorImpl - {E7E6F031-17CE-4C07-BC86-EABFE594F69C} - C:\Program Files\Java\jre6\lib\deploy\jqs\ie\jqs_plugin.dll
O4 - HKLM\..\Run: [USRpdA] C:\WINDOWS\SYSTEM32\USRmlnkA.exe RunServices \Device\3cpipe-USRpdA
O4 - HKLM\..\Run: [SunJavaUpdateSched] "C:\Program Files\Common Files\Java\Java Update\jusched.exe"
O4 - HKCU\..\Run: [MSMSGS] "C:\Program Files\Messenger\msmsgs.exe" /background
O4 - HKCU\..\Run: [RegGenie v2.0 - Trial Expired] "C:\Program Files\RegGenie\RegGenieOnRebootExpired.exe"
O4 - HKCU\..\Run: [RegGenie v2.0] "C:\Program Files\RegGenie\RegGenieOnReboot.exe"
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [SpybotSD TeaTimer] C:\Program Files\Spybot - Search & Destroy\TeaTimer.exe
O4 - Global Startup: TEW-624UB & TEW-644UB Manager.lnk = C:\Program Files\TRENDnet\TEW-624UB_TEW-644UB\WlanCU.exe
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O16 - DPF: {6414512B-B978-451D-A0D8-FCFDF33E833C} (WUWebControl Class) - http://update.microsoft.com/windowsupdate/v6/V5Controls/en/x86/client/wuweb_site.cab?1267212781328
O23 - Service: Java Quick Starter (JavaQuickStarterService) - Sun Microsystems, Inc. - C:\Program Files\Java\jre6\bin\jqs.exe
O23 - Service: WLSVC - Unknown owner - C:\Program Files\TRENDnet\TEW-624UB_TEW-644UB\WLSVC.exe

--
End of file - 3310 bytes

I will help you with this problem though my suggestion is to save all your personal files to DVDR or CDR etc etc and do a factory restore (Like the computer came from the store when you first bought it)

Reason being is, not trying to be a lazy tech, since you stated "There have been viruses in the past and possible registry errors" you will always have issues with any updates or installations in the future.

How do you do a factory restore? Is this different than reinstalling the operating system? Because when I first got the pc I put the xp disk that came with the pc in and went through the whole setup process with installing xp and it seemed to be like it was from the store when we first got it. I have no personal files on the computer as I started from scratch.

Update: I was able to get about 150 high priority, software, and hardware updates installed from Windows Update today as well as AVG Antivirus. Still getting the registry error and I've tried installing service pack 3 three times and get the error message 0x8007F0DA. Microsoft's support site gives a few suggestions for this error code about registering Cryptographic Services files and I did all of these with no success of getting sp3 installed.

Configure your computer to start from the CD-ROM drive. For more information about how to do this, refer to your computer's documentation or contact your computer manufacturer. Then insert your Windows XP Setup CD, and restart your computer.

1.
When the Press any key to boot from CD message is displayed on your screen, press a key to start your computer from the Windows XP CD.

2.
Press ENTER when you see the message To setup Windows XP now, and then press ENTER displayed on the Welcome to Setup screen.

3.
Do not choose the option to press R to use the Recovery Console.

4.
In the Windows XP Licensing Agreement, press F8 to agree to the license agreement.

5.
Make sure that your current installation of Windows XP is selected in the box, and then press R to repair Windows XP.

6.
Follow the instructions on the screen to complete Setup.

I did the factory restore as you described. I have only seen the registry error once since doing this and I have been able to get SP2 and SP3 installed after several tries on SP3 but it is installed. Now I am noticing a different problem. It seems my computer has some resistance to any antivirus software I install. Before I did the factory restore I downloaded the 30 day free trial of AVG Antivirus and noticed that every time I started up the computer all of the virus definitions were gone. In order to get it recognized by windows security alerts I had to re-download the virus updates every time I started the computer up. I know these weren't new files each time because they were the same file size. After the factory restore I figured that I would try the Symantec Antivirus Corporate Edition that I get from my college. After having it on the computer for two days each time I start the computer the virus definitions revert to the ones you get from the basic install even though they were just updated the day before. While trying a full scan today I got this message: (Missing Virus Definitions) Symantec AntiVirus has determined that the virus definitions are missing on this computer. This computer will remain unprotected from viruses until virus definitions are downloaded to this computer. A common cause of this problem is the absence of Internet or network connectivity. Please contact your system administrator on how to update your virus definition file. My interent connection is obviously fine as I am able to surf the net with no problem. I got this error message after downloading the new definitions probably 5 minutes before, everything was ok then windows security alert popped up and said my virus definitions were out of date. I read online about some others having the problem and mainly what I saw was that there could be a virus remaining on the computer stopping you from enabling auto-protect and keeping new definition files. Is it possible a virus could stay on a computer even after a factory restore?

I don't care for symantec , unstill that and install Avira 100% better program and more reliable!

They have both a free version and pay one for $26