Fell for call from Microsoft scam. What now?

An elderly neighbor of mine with a 9 year old Win XP computer fell for a scam today - got a phone call from someone claiming to be from Microsoft who said he detected problems with her computer, etc. He managed to get remote access to her computer and apparently this went on for a few hours until another neighbor came along and saw what was going on... when she took the phone and challenged the caller ther got angry and locked the computer.

My neighbor said she didn't have anything that she needed saved on the computer so I used the Windows Install disc to reinstall WindowsXP. I'm wondering if this is sufficient to restore the computer to a safe state for her to start using again - or could there still be some malware left on the computer by the bad guys?
 
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