Windows XP home version service pack 2

I am having an issue with a family member's PC (Dell Dimension 4550). When booting up the PC stalls on the Windows logo and just sits there. There is no disk activity based on the hard drive light. I have to reboot in safe mode. Using system restore does not resolve the issue. I have reloaded Windows and this resolves the issue. A week later this issue occurs again. The PC was on dialup (AOL) and was switched to broadband (ATT DSL). The issue occured after the PC was switched to broadband. The user still uses AOL software (ver 9) to access email. The virus and spyware software is from CA, downloaded and installed from the ATT Yahoo website. I am planning to wipe the hard drive and reinstall Windows XP and all the other software. Could this be a hardware issue?