PS7.0 (Error: "Could not initialize Photoshop because the preferences file was invalid (it has

Hi, i'm running Win XP and i'm always getting this error. I tried deleting the preferences file using the Ctrl-Alt-Shift and it does nothing. I then had a look and the place where its supposed to be is missing. The folder (and folders that are supposed to be in it) doc & settings/username/applications... etc.
I've tried to re-install and the folder doesn't come back. What else can i do?

Have you got "view hidden files and folders" checked in order to see hidden files? I don't know how this relates to the error though. Perhaps try creating a new user account.