It looks like in trying to make the OS more secure, the latest MS updates (KB915597 and KB976098) “could” actually break the windows login process. From what I understand the access permissions on the winlogon shell entry for explorer.exe are invalidated after this update and hence the OS will not load explorer.exe (and you end up with a black screen). The whole story can be found over at Prevx’s Blog site plus a potential rescue program (and how to use it).
As bad as MS is — sometimes — with their updates, I think this one is the worst. Although, if I were MS I would have probably done the same thing. Too many malwares attach themselves (or attack) this entry, so it makes sense to tighten up security around it. You could argue that this problem has been around since the dawn of windows, so why wasn’t it fixed in Vista, 7, etc before they were released, but that’s another matter :-). Hopefully you’re not one of the people with it, but if you are, try the Pervx fix before you “format c:”.