Macbook CPU causing trouble

A few days ago while browsing in Safari, the dreaded spinning rainbow wheel popped up and it ended with me having to turn off the computer (by holding the power button, I couldn't move the mouse pointer to turn it off normally). After that the CPU has been operating at what seems to be maximum capacity. The fan sounds like it's on max as well (as if I'm running loads of heavy apps when in fact I'm running none).

When I start it up it usually goes several times between my desktop (without icons) and a blue screen before it turns on "properly", and sometimes it doesn't even do that, it just shows the menu bar, desktop background and spinning pointer wheel and nothing else comes up. When it does work it goes dreadfully slow; videos hang for several seconds, opening folders takes time, etc. etc.

What the hell has happened? My iStatPro tells me this about the CPU:

User: 70-80%
System: 20-30%
Nice: 0
Idle 1-2%

There's plenty of inactive and free memory and I've got more than 7 gigs of free space.

Is there anything I can do besides letting Apple fix this?

 

The item 'loginwindow' is taking up 99% of the CPU power, Activity Monitor tells me. Quitting it doesn't help much, it just logs me out and I assume the item pops up again. I quit everything else I could and it's running slightly more smoothly, but far from acceptably.

Not sure. How can I check this?

It was bought September of last year.

Yes, but several months ago, and I haven't had any problems with it until now (apart from a defect battery that was easily replaced). Some of my flatmates might have dropped it while I wasn't around, but I doubt it.

No, I'll try that.

No.

Clean factory install.

Yes. Didn't help much.

 

After having taken out and re-inserted the memory sticks, the Macbook now won't start at all. There's a blue screen and strange, low, clicking sounds coming from deep within it. And after a few seconds it sort of gives up and what looks like a folder with a question mark on it appears on the screen. I've tried every combo possible with the mem sticks, using both original and third party sticks, in different positions, etc. but it's the same result each time.

So I guess letting Apple fix it is my last option.

Do I have to send it in with my hard drive still in it? If I do, will it almost certainly be formatted?