As per your instructions i have completed the process of the removing the problem i am facing by the message 'generic host process for Win32 Services has encountered a prblem and needs to close'.

After that My Hijackthis Log is

Logfile of HijackThis v1.99.1
Scan saved at 7:18:08 PM, on 5/18/2007
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP2 (6.00.2900.2180)
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\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\PROGRA~1\Grisoft\AVG7\avgamsvr.exe
C:\PROGRA~1\Grisoft\AVG7\avgupsvc.exe
C:\Program Files\Common Files\Microsoft Shared\VS7Debug\mdm.exe
C:\WINDOWS\System32\svchost.exe
C:\Program Files\Canon\CAL\CALMAIN.exe
C:\WINDOWS\system32\wscntfy.exe
C:\WINDOWS\Explorer.EXE
C:\Program Files\Hewlett-Packard\OrderReminder\OrderReminder.exe
C:\PROGRA~1\Grisoft\AVG7\avgcc.exe
D:\Program Files\Nokia\Nokia PC Suite 6\LaunchApplication.exe
C:\WINDOWS\SOUNDMAN.EXE
C:\WINDOWS\system32\hkcmd.exe
D:\Program Files\Microsoft Office\Office12\GrooveMonitor.exe
C:\Program Files\MSN Messenger\MsnMsgr.Exe
C:\Program Files\Messenger\msmsgs.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Common Files\Ahead\Lib\NMBgMonitor.exe
C:\Program Files\Common Files\Ahead\Lib\NMIndexingService.exe
C:\Program Files\PC Connectivity Solution\ServiceLayer.exe
C:\Program Files\Common Files\Ahead\Lib\NMIndexStoreSvr.exe
D:\Program Files\Microsoft Office\Office12\WINWORD.EXE
D:\Program Files\HijackThis\HijackThis.exe
R1 - HKCU\Software\Microsoft\Internet Connection Wizard,ShellNext = http://uk.mcafee.com/root/campaign.asp?cid=9114
O2 - BHO: Groove GFS Browser Helper - {72853161-30C5-4D22-B7F9-0BBC1D38A37E} - D:\PROGRA~1\MICROS~1\Office12\GRA8E1~1.DLL
O2 - BHO: Windows Live Sign-in Helper - {9030D464-4C02-4ABF-8ECC-5164760863C6} - C:\Program Files\Common Files\Microsoft Shared\Windows Live\WindowsLiveLogin.dll
O3 - Toolbar: (no name) - {0BF43445-2F28-4351-9252-17FE6E806AA0} - (no file)
O4 - HKLM\..\Run: [OrderReminder] C:\Program Files\Hewlett-Packard\OrderReminder\OrderReminder.exe
O4 - HKLM\..\Run: [AVG7_CC] C:\PROGRA~1\Grisoft\AVG7\avgcc.exe /STARTUP
O4 - HKLM\..\Run: [McAfee Guardian] "C:\Program Files\McAfee\McAfee Shared Components\Guardian\CMGrdian.exe" /SU
O4 - HKLM\..\Run: [NeroFilterCheck] C:\Program Files\Common Files\Ahead\Lib\NeroCheck.exe
O4 - HKLM\..\Run: [PCSuiteTrayApplication] D:\Program Files\Nokia\Nokia PC Suite 6\LaunchApplication.exe -startup
O4 - HKLM\..\Run: [SoundMan] SOUNDMAN.EXE
O4 - HKLM\..\Run: [IgfxTray] C:\WINDOWS\system32\igfxtray.exe
O4 - HKLM\..\Run: [HotKeysCmds] C:\WINDOWS\system32\hkcmd.exe
O4 - HKLM\..\Run: [GrooveMonitor] "D:\Program Files\Microsoft Office\Office12\GrooveMonitor.exe"
O4 - HKCU\..\Run: [MsnMsgr] "C:\Program Files\MSN Messenger\MsnMsgr.Exe" /background
O4 - HKCU\..\Run: [MSMSGS] "C:\Program Files\Messenger\msmsgs.exe" /background
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [BgMonitor_{79662E04-7C6C-4d9f-84C7-88D8A56B10AA}] "C:\Program Files\Common Files\Ahead\Lib\NMBgMonitor.exe"
O4 - Startup: OneNote 2007 Screen Clipper and Launcher.lnk = D:\Program Files\Microsoft Office\Office12\ONENOTEM.EXE
O4 - Global Startup: Adobe Gamma Loader.lnk = C:\Program Files\Common Files\Adobe\Calibration\Adobe Gamma Loader.exe
O8 - Extra context menu item: E&xport to Microsoft Excel - res://D:\PROGRA~1\MICROS~1\Office12\EXCEL.EXE/3000
O9 - Extra button: Send to OneNote - {2670000A-7350-4f3c-8081-5663EE0C6C49} - D:\PROGRA~1\MICROS~1\Office12\ONBttnIE.dll
O9 - Extra 'Tools' menuitem: S&end to OneNote - {2670000A-7350-4f3c-8081-5663EE0C6C49} - D:\PROGRA~1\MICROS~1\Office12\ONBttnIE.dll
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - D:\PROGRA~1\MICROS~1\Office12\REFIEBAR.DLL
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
O16 - DPF: {6414512B-B978-451D-A0D8-FCFDF33E833C} (WUWebControl Class) - http://update.microsoft.com/windowsu...?1179476463234
O16 - DPF: {6E32070A-766D-4EE6-879C-DC1FA91D2FC3} (MUWebControl Class) - http://update.microsoft.com/microsof...?1179478549344
O18 - Protocol: grooveLocalGWS - {88FED34C-F0CA-4636-A375-3CB6248B04CD} - D:\PROGRA~1\MICROS~1\Office12\GR99D3~1.DLL
O18 - Protocol: livecall - {828030A1-22C1-4009-854F-8E305202313F} - C:\PROGRA~1\MSNMES~1\MSGRAP~1.DLL
O18 - Protocol: ms-help - {314111C7-A502-11D2-BBCA-00C04F8EC294} - C:\Program Files\Common Files\Microsoft Shared\Help\hxds.dll
O18 - Protocol: msnim - {828030A1-22C1-4009-854F-8E305202313F} - C:\PROGRA~1\MSNMES~1\MSGRAP~1.DLL
O18 - Filter hijack: text/xml - {807563E5-5146-11D5-A672-00B0D022E945} - C:\PROGRA~1\COMMON~1\MICROS~1\OFFICE12\MSOXMLMF.DLL
O23 - Service: Adobe LM Service - Unknown owner - C:\Program Files\Common Files\Adobe Systems Shared\Service\Adobelmsvc.exe
O23 - Service: AVG7 Alert Manager Server (Avg7Alrt) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgamsvr.exe
O23 - Service: AVG7 Update Service (Avg7UpdSvc) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgupsvc.exe
O23 - Service: Canon Camera Access Library 8 (CCALib8) - Canon Inc. - C:\Program Files\Canon\CAL\CALMAIN.exe
O23 - Service: NBService - Nero AG - C:\Program Files\Nero\Nero 7\Nero BackItUp\NBService.exe
O23 - Service: NMIndexingService - Nero AG - C:\Program Files\Common Files\Ahead\Lib\NMIndexingService.exe
O23 - Service: ServiceLayer - Nokia. - C:\Program Files\PC Connectivity Solution\ServiceLayer.exe

and Look2Me Distroyer.txt file contains

Look2Me-Destroyer V1.0.12
Scanning for infected files.....
Scan started at 5/18/2007 7:09:10 PM

Attempting to delete infected files...
Making registry repairs.

Restoring Windows certificates.
Replaced hosts file with default windows hosts file

Restoring SeDebugPrivilege for Administrators - Succeeded

Now please guide me further as i am getting the problem still after doing all the above process instructed by you.

Thanks