I had faced such a situation while trying my hand in SPS 2003. To solve this
problem what I had done is, I deleted all the folders related to SPS. Then from
the registry I deleted all the entries related to Sharepoint. Just use REGEDIT
and search for Sharepoint or WSS and delete those entries from the registry.
Needless to say utmost care you should take while deleting. But you can try this
before you think of formatting your machine. It had worked for me, so I am
talking this with confidence.