First of all unhide all the programs. if u have a broad band or dial up connection jst get off the Ethernet connection.then restart the computer and press F7.you got in safe mode and run the computer with network there you search where the unauthorized folder are there or not if then just delete all unauthorized folder.then put the xp-cd on cd-rom and install it.after installing put the firewall on.Now ur computer is safe....

Hi and welcome to Daniweb,
You give a good scenario, but unfortunately it is a lot more involved.
Go to, Viruses, Spyware and other Nasties in Daniweb and read about removing malware there. Thank you for your input.