Ok, sounds hardware, or you keep introducing the bad program back into the system after re-installation. Run a few anti-virus online programs, trendmicro, kaspersky and panda all have them (Trendmicro is the only one that fixes though)
If spybot is locking up your system it is fighting an infection, I have used it for > 5yrs and never had a real problem, unless the system is infected.
No AV is 100%, sorry for assuming it was free though 99% of people running AVG run the free version.
If you have corruption in XP, verify your files:
Drop in your XP CD, and run "sfc /scannow" at the run line.
also you can see what in your PC is talking to the outside world while online, get x-netstat pro:
Fresh Software - X-NetStat Professional Home Page
For what is running on the PC:
TaskInfo Home Page
Otherwise find a bootable test software on download.com that will run your RAM and processor and HDD thru tests. I use Tufftest, but not sure if they have a trial version.
I can't believe I am giving away all my secrets
BTW: If you are indeed using dialup (Modem comment earlier) all current software (Bloatware) is designed for DSL and above speeds, IE and Firefox included. There may be a way to tune it for dialup, but I don't know how (Kind of like learning to grease old horse-drawn wagons)