My Inspirion 1545 boots to a blank desktop with cursor

My buddy's Inspirion 1545 boots to a blank desktop with just a cursor. Vista Home premium SP2.
All Hardware tests pass. Tried repair worked for one warm reboot then went back to same issue. It does boot to safe mode with/without networking. In fact I am posting this while in safe mode with networking. I suspect corrupted OS/driver of some sort but would like to recovery without reload if possible. He does have a lot of data that needs to be backed up. Any help with this is greatly appreciated. thanks

Can you get into System Restore and try some earlier restore point. It may/may not work.