So even after a restart, the display driver install didn't help at all? Well... before we do anything too drastic let's see what's running once you successfully get the problem comp into safe mode again.
http://www.whatthetech.com/hijackthis/ Follow steps 1 and 2 (post the log) I guess if you download the file on the good comp and transfer it over it'll be easier.
Oh, and I forgot to address one of your questions: You CAN install windows 7 again without losing your files. Just do a standard install (all programs will be lost though) Usually people suggest a clean install, but if it'll give you time to backup your files, it's not really that bad.