Hi,
I had the same problem.
I looked at the microsoft website, for virusses, and it
said i was probably infected with a blastworm virus.
I had to have sp4 installed for the removal tool to work.
With only a 56K modem, this was not an option. But I did
have the firewall from synmantec's internet security
software package.
This way, the svchost.exe was blocked to make contact with
the internet.
(with the blastworm virus, the svchost acceses "the
internet" on random ports, causing your pc to be unable to
cut and paste, etc.).