Lots of good suggestions here.
A few of my buddies (network admins, engineers, hobbyists) and I have worked out a system we tell friends.
1.A. Run Windows Update from the website. Internet explorer has a menu option in the tools menu.
1.B. Run Housecall:
http://housecall.trendmicro.com/1.C. Download Avast. It's the best possible anti-virus software you can get for home use. Including McAffee and Norton. They're crap. Download Avast.
www.avast.com2. Sunbelt Kerio Personal Firewall. A restricted-use version is also free. I liked it better when Kerio maintained control of it, but it's still alright. The main benefit here is traffic restriction - you can see what is trying to come in AND what's trying to go out.
http://www.sunbelt-software.com/Home-Home-Office/Sunbelt-Personal-Firewall/ The free version will suffice (it runs as a full version for 30 days).
3. After those are installed, run Hitman Pro. Then run it a second time.
4. Download the Firefox Browser, and quit using IE. Stick in the AdBlock Plus extensions so you quit getting suckered by ads that say you have viruses.
5. Repeat steps 1-4 a second time and watch the results of the scans/repairs.
Chances are you don't have any viruses or serious malware to begin with. Follow those steps. If Avast, Housecall, and Hitman pick up viruses or malware the first go around, complete the steps, then run them all again. If they STILL pick up problems, then reformat.
I'd put money down that says this is not a serious problem that requires a reformat of the hard disk.