oh man thats really bad, u know files in system32 are the most sensitive and vital files in your pc, and antiviruses cannot delete them cause it would cause ireparable damage to your system, and these system files have some sort of shadow copies that can regenerate the file if u even try to alter it "clean it or delete it" so in other words that file that the virus got is an extremely vital file in your pc, most of these cases are hopeless cases and usualy are dealt with by formating.
if u wanna play it safe just backup all your important files and scan them to makes sure the virus didnt replicate itself into the files you need then save it into a disk or separate drive on a separate pc then reformat your pc, but if your the type like me that fancies a little risk then read on, but remember i warned you...
i am researching on how to manually remove viruses without formatting, only this is kinda risky, you could risk destroying your system file and your pc might not even boot up anymore.
okay so let's get started.
1st lets try step one
reboot you pc in safe mode, then once ur logged on press ctrl + shift + del to bring up the task manager, then click on processes and click show processes from all users, now there should be very few visible processes here something like system files with the word in all capital letters SYSTEM yup this is what we need, now browse your system32 folder and locate the infected file c:\\windows\system32\userinit.exe as you have stated above, now try to find the closes match to that file in the processes i cant really guide u on this because i cant see it but for example there should be at least one match showing either half or whole of the name of the file that was infected this is only an example "userinit SYSTEM 02 156K" so just try to find the closes match, if you did u can skip this next part; so u didnt find a similar file process to that of the infected file? well thats really too bad looks like your dealing with a hidden file, ok if u cant find the closest match then try to find the most suspicious process that is running for example "mpqrs SYSTEM 02 156K" ok who ever heard of something called mpqrs? now thats suspicious now that u found the process we want its time to remove it
next step is to as quick as you can highlight the targeted process then click end process and if a confirmation box appears click it right away now within a split second delete that infected file in system32 by highlighting it then press delete once u see it deleted quickly shut off the power of your pc from the avr to make sure the file doesnt backup itself.
now if all went well just power it back on and hopefully windows will rewrite the deleted file with a fresh uninfected file when it reboots, though there is a very high chance your pc wont boot or u might get an error, if this happens reboot using the OS installation cd then go to the setup and select repair windows xp "if thats the operating system your using" now just wait for the system to get repaired then boot it up again, if all worked well then your virus is now probably gone from your system forever, just make sure to do a full scan of your pc to make sure it really is gone.
if this works please let me know, if it doesnt then im really sorry but u might have to reformat or try some of the other suggestions users may have recommended, and please dont get mad- i did warn you didnt i? okay thats it for today have a nice day and stay away from viruses.