1st if you have XP after you download all the spyware removers and update them.(optional) Boot into SAFEMODE(F8 or one of those) its about the only way you can get every bit of your spyware,viruses,trojans,ect..... out of your system.
BIG"B's Linked Online Security FOR XP
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SOFTWARE
Top Four Security Downloads (you must have them) FIRE WALL DOWNLOAD HERE
AV DOWNLOAD HERE
SPY WARE REMOVER DOWNLOAD HERE
SPY WARE REMOVER DOWNLOAD HERE
ANTI-TROJAN DOWNLOAD HERE
Note: All downloads above are worthless without updates
Keep in mind after reinstalling windows you will have to get all the updates patches. Reinstall all software for printers,usb devices ect... (1 hour +)
Now back to you first question about reformatting.(xp)
STEP:1 Go into your BIOS and make sure it says boot from CD-ROM
STEP:2 Place the windows cd in the drive
STEP:3 Reboot the computer
STEP:4 Make sure you delete all the partions (Letter D)