Over this last weekend I picked up a few different Trojans and BackDoor viruses, for a total of 5. They sat in my windows assembly folder and attacked my Trend Micro anti virus. My computer would lock up during a scan so I would have to restart. I started in safe mode and downloaded Trend Micro House Call, which detected 7 threats, then 11, then 17, the number kept increasing after every scan, and it had gotten to the point that I knew which files were infected and could scan just those files. Trend Micro couldn't delete the files or get rid of them, so I tried to use MalwareBytes. MalwareBytes couldn't even start up at this point, so I looked up the name of one of the Trojans and a fourm post on Avast's site popped up. It explained how to download and run a program called "Combofix". So I figured I didn't have anything to lose by running it. I ran Combofix twice and then attempted with Malwarebytes. By this time Trend Micro House Call, and my Trend that is installed on my computer had a count of 65 viruses, and 7 web threats. When I ran malwarebytes the scan found 1 threat and got rid of it. I scanned my computer again and nothing was picked up. I used house call and again nothing was found. Then I tried to use Trend, and again nothing was found. I was talking to my friend who told me to install a fire wall. He builds, fixes and cleans computers for a living and so I trusted his judgment and went with Zone Alert. As soon as it had installed and turned on, my internet crashed. I was confused, and turned my computer off, then back on. I still had no access to the internet and Zone Alert told me it had prevented 1 attack. I clicked the button and it popped up a screen that had an IP address similar to the following one (it isn't the following one for protective purposes): 192.168.1.182. Zone Alert identified this IP as the "Source IP". I did some digging on my network, and had found that my IP matched this one. Then next to this, it had a huge list of "Destination IP"'s. I turned my firewall off which then turned my internet back on. I told my friend what I had found and he explained to me that not only had my computer had viruses, but now it was trying to hack into computers. I gave him a list of 7 IP's that were on the list, all of which he used an IP tracking program to determine where it was from, and he had found that 5 of them were other people's computers, 1 was a HotMail server, and one was a msecn.net server. I gave him a few more IP's and he tracked them too and found that a few more were the msecn.net, and the rest were personal computers. He told me that what this means is my computer is attempting to hack into other computers, as well as Microsoft Edge Caching Network. He is recommending that I reformat my computer ASAP.
So now basically my questions to you are as follows;
Where did I pick up this horrid virus?
Is my computer really trying to hack into other people's computers?
Could I get into trouble for this? (I really don't need police showing up at my door for a virus's doing....)
How do YOU think I should get rid of this?
Is reformatting even a possibility anymore or do I need to completely wipe my hard drive?
If and when I reformat, what anti virus/malware/spyware/firewall do you recommend I install?
My computer's OS is Windows 7 64 Bit Home Premium.