You need to begin YOUR OWN thread, this one is six months old. To answer your question, if by going back to Factory Settings you mean actually wiping the drive and then installing, yes, infections would probably be removed but if by restore you mean just reinstall over present operating system then no, probably not.
I cannot say for sure why you cannot fully boot the machine without disabling the wireless hook up but honestly don't believe the Spybot run would have caused this.
Have you tried to boot in Safe Mode with Networking and see if that works?