Where the heck did Avira come from? It wasn't there before.
If it were MY computer I would go with Avira, in fact I do. I have used AVG and didn't like it, mainly because it doesn't do as good a job as Avira, at least I don't believe it does, plus it is loaded with "bloat". Take a look in your log and see how many AVG processes are there.
If you do decide to go with Avira uninstall AVG through the normal means. Then download and run the AVG Removal Tool to be certain all is gone.
Reboot and run a new HJT log and post that back here.

More good advice. I've removed AVG and followed all of the suggested steps.
The latest HJT log is here below.
*Any further suggestions with regards to keeping virus' off, or should Avira do it all for me?*
THANKS

Logfile of Trend Micro HijackThis v2.0.2
Scan saved at 23:19:43, on 27/08/2009
Platform: Windows XP SP3 (WinNT 5.01.2600)
MSIE: Internet Explorer v8.00 (8.00.6001.18702)
Boot mode: Normal

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\Ati2evxx.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\system32\Ati2evxx.exe
C:\WINDOWS\Explorer.EXE
C:\WINDOWS\system32\spoolsv.exe
C:\Program Files\Avira\AntiVir Desktop\sched.exe
C:\Program Files\Avira\AntiVir Desktop\avguard.exe
C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
C:\Program Files\Bonjour\mDNSResponder.exe
C:\Program Files\Java\jre6\bin\jqs.exe
C:\Program Files\Common Files\LightScribe\LSSrvc.exe
C:\Program Files\O2\bin\sprtsvc.exe
C:\WINDOWS\system32\svchost.exe
C:\Program Files\Canon\CAL\CALMAIN.exe
C:\Program Files\Hewlett-Packard\Shared\hpqwmiex.exe
C:\Program Files\ATI Technologies\ATI Control Panel\atiptaxx.exe
C:\Program Files\Hp\HP Software Update\HPWuSchd2.exe
C:\Program Files\Synaptics\SynTP\SynTPEnh.exe
C:\Program Files\HP\QuickPlay\QPService.exe
C:\Program Files\HPQ\Quick Launch Buttons\EabServr.exe
C:\Program Files\hpq\HP Wireless Assistant\HP Wireless Assistant.exe
C:\Program Files\Creative\Creative Live! Cam\VideoFX\StartFX.exe
C:\WINDOWS\V0270Mon.exe
C:\Program Files\Adobe\Reader 8.0\Reader\Reader_sl.exe
C:\Program Files\O2\bin\sprtcmd.exe
C:\Program Files\iTunes\iTunesHelper.exe
C:\Program Files\Java\jre6\bin\jusched.exe
C:\Program Files\Avira\AntiVir Desktop\avgnt.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Creative\Creative Live! Cam\Live! Cam Manager\CTLCMgr.exe
C:\Program Files\Google\GoogleToolbarNotifier\GoogleToolbarNotifier.exe
C:\Program Files\CASIO\Photo Loader\Plauto.exe
C:\PROGRA~1\hpq\Shared\HPQTOA~1.EXE
C:\Program Files\HP\Digital Imaging\bin\hpqimzone.exe
C:\WINDOWS\system32\wuauclt.exe
C:\Program Files\iPod\bin\iPodService.exe
C:\WINDOWS\System32\svchost.exe
C:\Program Files\Trend Micro\HijackThis\HijackThis.exe

R0 - HKCU\Software\Microsoft\Internet Explorer\Main,Start Page = http://www.virginmedia.com
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = http://go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKCU\Software\Microsoft\Internet Explorer\SearchURL,(Default) = http://uk.search.yahoo.com/search?fr=mcafee&p=%s
O2 - BHO: Adobe PDF Reader Link Helper - {06849E9F-C8D7-4D59-B87D-784B7D6BE0B3} - C:\Program Files\Common Files\Adobe\Acrobat\ActiveX\AcroIEHelper.dll
O2 - BHO: Windows Live Sign-in Helper - {9030D464-4C02-4ABF-8ECC-5164760863C6} - C:\Program Files\Common Files\Microsoft Shared\Windows Live\WindowsLiveLogin.dll
O2 - BHO: Google Toolbar Helper - {AA58ED58-01DD-4d91-8333-CF10577473F7} - C:\Program Files\Google\Google Toolbar\GoogleToolbar.dll
O2 - BHO: Google Toolbar Notifier BHO - {AF69DE43-7D58-4638-B6FA-CE66B5AD205D} - C:\Program Files\Google\GoogleToolbarNotifier\5.1.1309.15642\swg.dll
O2 - BHO: Google Dictionary Compression sdch - {C84D72FE-E17D-4195-BB24-76C02E2E7C4E} - C:\Program Files\Google\Google Toolbar\Component\fastsearch_A8904FB862BD9564.dll
O2 - BHO: Java(tm) Plug-In 2 SSV Helper - {DBC80044-A445-435b-BC74-9C25C1C588A9} - C:\Program Files\Java\jre6\bin\jp2ssv.dll
O2 - BHO: JQSIEStartDetectorImpl - {E7E6F031-17CE-4C07-BC86-EABFE594F69C} - C:\Program Files\Java\jre6\lib\deploy\jqs\ie\jqs_plugin.dll
O3 - Toolbar: Google Toolbar - {2318C2B1-4965-11d4-9B18-009027A5CD4F} - C:\Program Files\Google\Google Toolbar\GoogleToolbar.dll
O3 - Toolbar: (no name) - {CCC7A320-B3CA-4199-B1A6-9F516DD69829} - (no file)
O4 - HKLM\..\Run: [ATIPTA] "C:\Program Files\ATI Technologies\ATI Control Panel\atiptaxx.exe"
O4 - HKLM\..\Run: [HP Software Update] C:\Program Files\Hp\HP Software Update\HPWuSchd2.exe
O4 - HKLM\..\Run: [SynTPEnh] C:\Program Files\Synaptics\SynTP\SynTPEnh.exe
O4 - HKLM\..\Run: [QPService] "C:\Program Files\HP\QuickPlay\QPService.exe"
O4 - HKLM\..\Run: [eabconfg.cpl] C:\Program Files\HPQ\Quick Launch Buttons\EabServr.exe /Start
O4 - HKLM\..\Run: [Cpqset] C:\Program Files\HPQ\Default Settings\cpqset.exe
O4 - HKLM\..\Run: [RecGuard] C:\Windows\SMINST\RecGuard.exe
O4 - HKLM\..\Run: [Reminder] C:\Windows\CREATOR\Remind_XP.exe
O4 - HKLM\..\Run: [hpWirelessAssistant] C:\Program Files\hpq\HP Wireless Assistant\HP Wireless Assistant.exe
O4 - HKLM\..\Run: [BigDog303] C:\WINDOWS\VM303_STI.EXE VIMICRO USB PC Camera (ZC0301PLH)
O4 - HKLM\..\Run: [AVFX Engine] C:\Program Files\Creative\Creative Live! Cam\VideoFX\StartFX.exe
O4 - HKLM\..\Run: [V0270Mon.exe] C:\WINDOWS\V0270Mon.exe
O4 - HKLM\..\Run: [AppleSyncNotifier] C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleSyncNotifier.exe
O4 - HKLM\..\Run: [Adobe Reader Speed Launcher] "C:\Program Files\Adobe\Reader 8.0\Reader\Reader_sl.exe"
O4 - HKLM\..\Run: [O2] "C:\Program Files\O2\bin\sprtcmd.exe" /P O2
O4 - HKLM\..\Run: [QuickTime Task] "C:\Program Files\QuickTime\QTTask.exe" -atboottime
O4 - HKLM\..\Run: [iTunesHelper] "C:\Program Files\iTunes\iTunesHelper.exe"
O4 - HKLM\..\Run: [SunJavaUpdateSched] "C:\Program Files\Java\jre6\bin\jusched.exe"
O4 - HKLM\..\Run: [avgnt] "C:\Program Files\Avira\AntiVir Desktop\avgnt.exe" /min
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [updateMgr] C:\Program Files\Adobe\Acrobat 7.0\Reader\AdobeUpdateManager.exe AcRdB7_0_9
O4 - HKCU\..\Run: [Creative Live! Cam Manager] "C:\Program Files\Creative\Creative Live! Cam\Live! Cam Manager\CTLCMgr.exe"
O4 - HKCU\..\Run: [GoTrusted] C:\Program Files\GoTrusted.com\GoTrusted Secure Tunnel\GoTrusted Secure Tunnel.exe
O4 - HKCU\..\Run: [swg] C:\Program Files\Google\GoogleToolbarNotifier\GoogleToolbarNotifier.exe
O4 - HKUS\S-1-5-18\..\Run: [CTFMON.EXE] C:\WINDOWS\system32\CTFMON.EXE (User 'SYSTEM')
O4 - HKUS\S-1-5-18\..\Run: [Picasa Media Detector] C:\Program Files\Picasa2\PicasaMediaDetector.exe (User 'SYSTEM')
O4 - HKUS\.DEFAULT\..\Run: [CTFMON.EXE] C:\WINDOWS\system32\CTFMON.EXE (User 'Default user')
O4 - Global Startup: HP Photosmart Premier Fast Start.lnk = C:\Program Files\HP\Digital Imaging\bin\hpqthb08.exe
O4 - Global Startup: Photo Loader supervisory.lnk = C:\Program Files\CASIO\Photo Loader\Plauto.exe
O8 - Extra context menu item: E&xport to Microsoft Excel - res://C:\PROGRA~1\MICROS~3\OFFICE11\EXCEL.EXE/3000
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - C:\PROGRA~1\MICROS~3\OFFICE11\REFIEBAR.DLL
O9 - Extra button: (no name) - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS\Network Diagnostic\xpnetdiag.exe
O9 - Extra 'Tools' menuitem: @xpsp3res.dll,-20001 - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS\Network Diagnostic\xpnetdiag.exe
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O14 - IERESET.INF: START_PAGE_URL=http://www.hp.com
O18 - Protocol: skype4com - {FFC8B962-9B40-4DFF-9458-1830C7DD7F5D} - C:\PROGRA~1\COMMON~1\Skype\SKYPE4~1.DLL
O18 - Filter: x-sdch - {B1759355-3EEC-4C1E-B0F1-B719FE26E377} - C:\Program Files\Google\Google Toolbar\Component\fastsearch_A8904FB862BD9564.dll
O23 - Service: Avira AntiVir Scheduler (AntiVirSchedulerService) - Avira GmbH - C:\Program Files\Avira\AntiVir Desktop\sched.exe
O23 - Service: Avira AntiVir Guard (AntiVirService) - Avira GmbH - C:\Program Files\Avira\AntiVir Desktop\avguard.exe
O23 - Service: Apple Mobile Device - Apple Inc. - C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
O23 - Service: Ati HotKey Poller - ATI Technologies Inc. - C:\WINDOWS\system32\Ati2evxx.exe
O23 - Service: Bonjour Service - Apple Inc. - C:\Program Files\Bonjour\mDNSResponder.exe
O23 - Service: Canon Camera Access Library 8 (CCALib8) - Canon Inc. - C:\Program Files\Canon\CAL\CALMAIN.exe
O23 - Service: Google Software Updater (gusvc) - Google - C:\Program Files\Google\Common\Google Updater\GoogleUpdaterService.exe
O23 - Service: hpqwmiex - Hewlett-Packard Development Company, L.P. - C:\Program Files\Hewlett-Packard\Shared\hpqwmiex.exe
O23 - Service: InstallDriver Table Manager (IDriverT) - Macrovision Corporation - C:\Program Files\Common Files\InstallShield\Driver\11\Intel 32\IDriverT.exe
O23 - Service: iPod Service - Apple Inc. - C:\Program Files\iPod\bin\iPodService.exe
O23 - Service: Java Quick Starter (JavaQuickStarterService) - Sun Microsystems, Inc. - C:\Program Files\Java\jre6\bin\jqs.exe
O23 - Service: LightScribeService Direct Disc Labeling Service (LightScribeService) - Hewlett-Packard Company - C:\Program Files\Common Files\LightScribe\LSSrvc.exe
O23 - Service: SupportSoft Sprocket Service (O2) (sprtsvc_O2) - SupportSoft, Inc. - C:\Program Files\O2\bin\sprtsvc.exe
O23 - Service: SupportSoft RemoteAssist - SupportSoft, Inc. - C:\Program Files\Common Files\Supportsoft\bin\ssrc.exe

--
End of file - 9541 bytes

I would recommend that you also install SpywareBlaster. It is a FREE program which will protect your computer against:
Spyware, adware, browser hijackers, and dialers, prevent the installation of ActiveX-based spyware, block spying / tracking via cookies and restrict the actions of potentially unwanted or dangerous web sites.
Download, install, update ENABLE ALL protection and CLOSE the program. It doesn't run in the background. Check for updates weekly, doesn't always have them but when it does just enable all protection again and close the program.
Keep MBA-M and update and scan with it weekly, removing anything it finds.

Other than that if you feel all is working well you can also set a new, clean Restore point.
To do this Right Click My computer.
Choose Properties
When System Properties opens choose the System Restore Tab.
Place a check mark in Shut down System Restore.
You will probably get a message telling you it will be shut down, click ok or yes.
Allow it to shut down.
Wait a moment. Then go back in and take that check mark Out so that System Restore will turn back on.
Other than that you are good to go and if you agree you can mark this one solved.
Judy

CASE SOLVED!!!
Hugely appreciated. Thanks Judy.