Further research proves that problem is actually still there, and can be created on demand.
If the system is not connected to the network when booting, starts okay within 70 seconds, and remains okay when ethernet cable is re-attached.
The system ALWAYS fails when booting with ethernet cable attached, ie task bar remains blued-out.
Further research shows the problem exists also when Avast is uninstalled, however it is apparent that Avast exacerbates the problem, in that if Avast is not present, the system will start although it may take a number
of minutes to finish installing the task bar and initial functions. With Avast present it never finishes.
In safe mode with networking, no boot issues or problems, ie starts up fine; with msconfig with all non-MS services and start up items disabled, we get the original problems
I have tried this with another ethernet nic installed with the same results. However the system performs as it should with and without Avast with a wireless nic installed (in normal mode).
In another system with the same problem, we have done a clean install of Win XP SP3, no problems subsequently with or without Avast.