Edit: Before doing the following, please check my next post as there is something else I wanted to check with you.
Here are some final instructions for you.

Your
Java is out of date. Older versions have vulnerabilities that malware can use to infect your system. Please follow these steps to remove older version of
Java components and upgrade the application. Beware it is NOT supported for use in 9x or ME and probably will not install in those systems
Upgrading Java:
- Download the latest version of Java Runtime Environment (JRE) 6 Update 6.
- Scroll down to where it says Java Runtime Environment (JRE) 6 Update 6. The Java SE Runtime Environment (JRE) allows end-users to run Java applications (the fifth one in the list).
- Click the "Download" button to the right. A new page will open.
- Select your platform and check the box that says: I agree to the Java SE Runtime Environment 6 License Agreement.
- Click Continue.
- Click on the link under Windows Offline Installation (jre-6u6-windows-i586-p.exe) and save it to your desktop. Do NOT use the Sun Download Manager.
- Go to Start - Control Panel, double-click on Add/Remove programs and remove all older versions of Java.
- Check any item with Java Runtime Environment (JRE or J2SE) in the name.
- Click the Remove or Change/Remove button.
- Repeat as many times as necessary to remove each Java version.
- Reboot your computer once all Java components are removed.
- Close any programs you may have running - especially your web browser.
- Then from your desktop double-click on the download to install the newest version.
The following program will remove the tools we've used and their associated files and backups and then it will delete itself.
Please download
OTMoveIt2 by OldTimer.
- Save it to your desktop.
- Make sure you have an Internet Connection.
- Double-click OTMoveIt.exe to run it. (Vista users, please right-click on OTMoveIt2.exe and select "Run as an Administrator")
- Click on the CleanUp! button
- A list of tool components used in the cleanup of malware will be downloaded.
- If your firewall or real-time protection attempts to block OTMoveIt2 to reach the Internet, please allow the application to do so.
- Click Yes to begin the cleanup process and remove these components, including this application which will delete itself.
- You will be asked to reboot the machine to finish the cleanup process. If you are asked to reboot the machine choose Yes.
Now you should turn system restore off to flush out all previous system restore points, then turn it back on and create a new restore point:
To turn off system restore, on the Desktop, right click on
My Computer and click on
Properties.
Click the
System Restore tab.
Check
Turn off System Restore.
Click Apply and then click OK.
Restart your computer, turn System Restore back on and create a restore point.
To create a new restore point, click on
Start –
All Programs –
Accessories –
System Tools and then select
System Restore.
In the System Restore wizard, select
Create a restore point and click the Next button.
Type a name for your new restore point then click on Create.
I also recommend downloading
SPYWAREBLASTER for added protection.
Read here for info on how to tighten your security.
Delete Temporary Files:
Go to
Start -
Run and type in
cleanmgr and click OK.
Let it scan your system for files to remove.
Make sure Temporary Files, Temporary Internet Files, and Recycle Bin are the only things checked.
Press OK to remove them.
***
You should trim down your start-ups (these show as the 04 entries in your HijackThis log) as there are too many running. You can research them at these sites and if they aren’t required at start-up then you can uncheck them in msconfig via Start - Run - type msconfig click OK and then click on the start-up tab.
http://castlecops.com/StartupList.html http://www.bleepingcomputer.com/startups/ http://www.windowsstartup.com/wso/index.php