If you boot from your Windows CD you should (eventually) get an option to do a 'repair' installation. This will overwrite a lot of your system files with the original ones from your Windows CD. When you next boot Windows after that you will have to re-install any Windows updates and service packs but it should get your system working again.
However, if you've had a virus which was that destructive I'd recommend wiping your hard drive and starting from scratch.
As to whether the virus can spread if you attach the drive to another PC, the answer is "it depends". I reckon that as long as the PC you attach it to has good anti-virus software running, and you don't run any executable files from the infected drive, it will probably be OK. Putting the drive in a cheap USB external enclosure is probably a better idea as then you can wait until the other PC has booted and its AV software is running before you attach it.
Regards
Nelviticus