the virus alert by the date and be removed in control panel under ,Regional and language setting ,in there go to customize and time and you will see it there just choose one of the other time settings

Main problem, caper, is to get any exes to run. Most sys ones do, but not sfc.exe, and not so far any tool exes I have suggested. It's fun.... may be a simple blacklist at work, but it is not started via the methods that hijackthis lists.
Weasel.. combofix: rename the desktop icon to MyCF55.exe, then dclick it. Remember to turn off net connection, firewall, system defence and AV first. If it runs you may find that it has timed out, in which case it will tell you so & delete itself, > dl a fresh copy.
[system defence? the sort of thing that comes with, say, Comodo - it would drive you nuts as CF tries to install and run]

use this software to get rid of restrictive policies

Dial-A-Fix

it will get rid of the block task manager and most other restrictive policies

I will try that when I get out of work this evening. Thanks for the help guys.

Great news. I renamed combofix and its working. So currently I am running combofix. Should I run any of the other files too when it finishes?

I have attatched the log file.

Ah, nice, weasel.
==Again please disconnect from the web, turn off your Antivirus, Antispyware and Firewall for the duration of this scan:
Copy the text in the box to a notepad [format/wordwrap unchecked] and save as CFScript.txt to where you saved Combofix -that is, to your desktop.

Killall::

File::
C:\WINDOWS\system32\qoMdBUKa.dll
C:\WINDOWS\system32\ssqnMETJ.dll
C:\WINDOWS\system32\nnnNHYqn.dll
C:\WINDOWS\system32\xxyvuutq.dll
C:\WINDOWS\system32\fccYSiGV.dll
C:\WINDOWS\erfb.exe
C:\WINDOWS\grswptdl.exe
C:\WINDOWS\nfavxwdbpgs.dll
C:\WINDOWS\kgxmotapktx.dll
C:\WINDOWS\erms.exe
C:\WINDOWS\agpqlrfm.exe
C:\DOCUME~1\ADMINI~1\LOCALS~1\Temp\catchme.sys

Registry::
[-HKEY_LOCAL_MACHINE\~\Browser Helper Objects\{769D8280-A207-4EEA-9963-F8B156C32855}]

[-HKEY_LOCAL_MACHINE\~\Browser Helper Objects\{CBE1F7FF-5D9E-4213-8BD1-54B2AA144997}]

[hkey_local_machine\software\microsoft\windows\currentversion\explorer\ShellExecuteHooks]
"{769D8280-A207-4EEA-9963-F8B156C32855}"= -

[-HKEY_LOCAL_MACHINE\software\microsoft\windows nt\currentversion\winlogon\notify\xxyvuutq]

[-HKEY_LOCAL_MACHINE\System\ControlSet001\Services\catchme]

[-HKEY_LOCAL_MACHINE\System\ControlSet001\Services\catchme]

[HKEY_LOCAL_MACHINE\system\currentcontrolset\control\lsa]
"Authentication Packages"= hex(7):6d,73,76,31,5f,30,00,00

Good. Now drag the CFScript.txt icon onto the Combofix icon [mycmbfx.exe] on your desktop. Combofix will start, let it run, if your firewall prompts then allow all; post the log.
Please now run sfc /scannow
You should now be able to update MBAM and run it also; post the log.
There should be no need to run the other scans.

Weasel, don't use that previous script - I missed one file to delete, so use this modified version instead. The vundo infection there appears to have rootkit capabilities. I should also point out that your friend has had a keylogger trojan on his sys and so it is important that he changes important passwords and bank accounts that he may have accessed from the computer.
The new CFScript.txt:

Killall::

File::
C:\WINDOWS\system32\aKUBdMoq.ini2
C:\WINDOWS\system32\qoMdBUKa.dll
C:\WINDOWS\system32\ssqnMETJ.dll
C:\WINDOWS\system32\nnnNHYqn.dll
C:\WINDOWS\system32\xxyvuutq.dll
C:\WINDOWS\system32\fccYSiGV.dll
C:\WINDOWS\erfb.exe
C:\WINDOWS\grswptdl.exe
C:\WINDOWS\nfavxwdbpgs.dll
C:\WINDOWS\kgxmotapktx.dll
C:\WINDOWS\erms.exe
C:\WINDOWS\agpqlrfm.exe
C:\DOCUMENTS and SETTINGS\ADMINI~1\LOCALS~1\Temp\catchme.sys

Registry::
[-HKEY_LOCAL_MACHINE\~\Browser Helper Objects\{769D8280-A207-4EEA-9963-F8B156C32855}]

[-HKEY_LOCAL_MACHINE\~\Browser Helper Objects\{CBE1F7FF-5D9E-4213-8BD1-54B2AA144997}]

[hkey_local_machine\software\microsoft\windows\currentversion\explorer\ShellExecuteHooks]
"{769D8280-A207-4EEA-9963-F8B156C32855}"= -

[-HKEY_LOCAL_MACHINE\software\microsoft\windows nt\currentversion\winlogon\notify\xxyvuutq]

[-HKEY_LOCAL_MACHINE\System\ControlSet001\Services\catchme]

[-HKEY_LOCAL_MACHINE\System\ControlSet001\Services\catchme]

[HKEY_LOCAL_MACHINE\system\currentcontrolset\control\lsa]
"Authentication Packages"= hex(7):6d,73,76,31,5f,30,00,00

OK it seems like everything is working great now. After I ran combofix and SDFix the taskmanager was enabled and explorer stopped committing suicide repeatedly.

I ran MBAM twice. First time I ran it it found a bunch of malware, so I have attatched the logs from before i cleaned and after I cleaned, and then the third log from when I ran it a second time once I restarted.

Weasel, could you post the combofix log also? C:\combofix.txt
And the SDFix log; it's saved into the SDFix folder as Report.txt.

NP

Looks sweet. Just do a manual check that this thing is really gone:
C:\DOCUMENTS and SETTINGS\ADMINISTRATOR\LOCAL SETTINGS\Temp\catchme.sys
And if all seems fine, then... all is fine. Cheers.

Weasel, if things are okay then to clean up you should:
-uninstall MBAM.
-delete C:\SDFix
-Run combofix /u
Then reset folder options to your preferences.