So I thought I fixed it, but when Key tried to switch on the laptop, it has the same problem. Quick investigations using the enclosure reveal that the ntldr, ntdetect.com files are being deleted everytime the computer starts up! A quick call to Junx establishes it might be a virus. So I scan it and detect several viruses, and the McAfee automatically cleans them: W32/Squirrel, W32/Oror.dll, W32/Oror-G@mm. And copy all the relevant files.
Only, when I switch on the laptop again, the files are no longer automatically deleted, but... the computer can't seem to run .exe files anymore! It actually asks me what to use to open .exe. The files themself run, if I open some random file and specify word or excel or whatever then the word or excel will actually run. Silly, no? Whole of control panel is also down with some rundll32.exe is missing error, even though the file is right there in the folder.
Pissed off with the virus, so since I've got her files backed up I'm gonna reinstall windows. But silly bird that I am, I forgot to bring along the power cable. Quick check on symantec website reveals that Oror-C@mm and related viruses will insert themselves in the registry to make them run with every exe, so maybe that's the error. Damn. I can't seem to get this problem solved.