Iknownot:
Exactly, the svchost in the windows folder was part of the trojan. The real svchost is in windows\system32. So when I deleted it, it happily died a painful death.

Also, yes i removed all temp files (thanks to a batch file I found in this forum, sorry, i forget who wrote it).

The AV scans we did were as follows:
All definition updates were downloaded on all scanners
1. removed physical drive, installed in clean machine, scanned w/norton
found and removed 350+ instances of bagel and other small viruses
2. returned drive to original machine, booted to winpe, scanned w/mcafee command line
3. booted to xp, scanned w/norton
4. booted to xp safe mode, scanned w/norton
5. booted to xp, scanned w/trendmicro housecall

All scans found the dltime.dll file, but none could remove it completely.

I also scaned the machine with adaware (reg, safemode, winpe), spybot, and pest patrol. pest patrol found the false svchost, but failed to remove it.

The|Specialist|: (or whatever your old nick looked like)
I thought those entries were suspicious also. But as Nihil said, the files checked out. The HP one made me wonder, since the machine was indeed a dell, but it was not causing problems.