My friend who sits next to me in my computer graphics class is having trouble with his laptop.
I believe he has a virus, and i have some tools for disassembling viruses in safe-mode.
What is done exactly when a computer is booted in safe-mode, and what should i tell him if it wont boot in safe mode?... reformat and reinstall OS?

If you can't boot in safe mode, I would definitely first recommend putting it as a slave drive into a second computer, often when there is a problem with the OS, and you boot off of one XP, the OS will recognize that the other is damaged and automatically repair it.

Another thing I would recommend is to get the Ultimate Boot CD as it's a great computer repair tool, and may also help remove any viruses in the process.