Bad Smitfraud-C. malware. also u.exe. Help

Please help me. I do not know too much about computers, but am not totally computer illiterate:

I stumbled onto a site that did not seem threatening or malicious. AVG give me a firewall warning about "U.exe" I clicked deny, which apparently did nothing as my wallpaper was changed to a picture of a window: "warning spyware detected." Going to display properties I am missing some tabs and am left only with Themes, Appearance, and Settings.

Spybot search and destory has given me these resuts (note this is after a reboot and deletion of the Smitfraud-C.):

AdRevolver
DoubleClick
HitBox
MediaPlex
Microsoft.Windows.System
Smitfraud-C.
Statcounter
Zedo

I need to know how to fix this Smitfraud-C.. I have the feeling it will get worse or at least be incredibly bothersome. Please please please!

The only relation I can find between Smithfraud-C. and u.exe is that u.exe is the name of the file i "blocked" before I was hit with the malware.

Here is my HijackThis info (new to this program):

Logfile of Trend Micro HijackThis v2.0.2
Scan saved at 12:58:04 AM, on 10/2/2008
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP2 (6.00.2900.2180)
Boot mode: Normal

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\WINDOWS\Explorer.EXE
C:\WINDOWS\RTHDCPL.EXE
C:\WINDOWS\system32\RUNDLL32.EXE
C:\Program Files\Winamp\winampa.exe
C:\Program Files\Linksys Wireless-G USB Wireless Network Monitor\InfoMyCa.exe
C:\Program Files\Java\jre1.6.0_07\bin\jusched.exe
C:\Program Files\Grisoft\AVG Anti-Spyware 7.5\avgas.exe
C:\PROGRA~1\Grisoft\AVG7\avgcc.exe
C:\Program Files\Microsoft Office\Office12\GrooveMonitor.exe
C:\WINDOWS\System32\spool\DRIVERS\W32X86\3\E_FATIADA.EXE
C:\Program Files\iTunes\iTunesHelper.exe
C:\WINDOWS\system32\lphcjm5j0e1be.exe
C:\program files\valve\steam\steam.exe
C:\Program Files\DAEMON Tools Lite\daemon.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Spybot - Search & Destroy\TeaTimer.exe
C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
C:\Program Files\Grisoft\AVG Anti-Spyware 7.5\guard.exe
C:\PROGRA~1\Grisoft\AVG7\avgamsvr.exe
C:\PROGRA~1\Grisoft\AVG7\avgupsvc.exe
C:\PROGRA~1\Grisoft\AVG7\avgemc.exe
C:\Program Files\Bonjour\mDNSResponder.exe
C:\Program Files\Nero\Nero8\Nero BackItUp\NBService.exe
C:\WINDOWS\system32\nvsvc32.exe
C:\WINDOWS\system32\svchost.exe
C:\Program Files\Linksys Wireless-G USB Wireless Network Monitor\WLService.exe
C:\Program Files\Linksys Wireless-G USB Wireless Network Monitor\WUSB54Gv4.exe
C:\PROGRA~1\Grisoft\AVG7\avgfwsrv.exe
C:\WINDOWS\system32\wscntfy.exe
C:\Program Files\iPod\bin\iPodService.exe
C:\Program Files\Common Files\Nero\Lib\NMIndexingService.exe
C:\Program Files\Mozilla Firefox\firefox.exe
C:\Program Files\Spybot - Search & Destroy\SpybotSD.exe
C:\Program Files\Trend Micro\HijackThis\HijackThis.exe

R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Internet Settings,ProxyOverride = *.local
O2 - BHO: AcroIEHlprObj Class - {06849E9F-C8D7-4D59-B87D-784B7D6BE0B3} - C:\Program Files\Adobe\Acrobat 7.0\ActiveX\AcroIEHelper.dll
O2 - BHO: Spybot-S&D IE Protection - {53707962-6F74-2D53-2644-206D7942484F} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O2 - BHO: Groove GFS Browser Helper - {72853161-30C5-4D22-B7F9-0BBC1D38A37E} - C:\PROGRA~1\MICROS~2\Office12\GRA8E1~1.DLL
O2 - BHO: SSVHelper Class - {761497BB-D6F0-462C-B6EB-D4DAF1D92D43} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O4 - HKLM\..\Run: [RTHDCPL] RTHDCPL.EXE
O4 - HKLM\..\Run: [Alcmtr] ALCMTR.EXE
O4 - HKLM\..\Run: [NvCplDaemon] RUNDLL32.EXE C:\WINDOWS\system32\NvCpl.dll,NvStartup
O4 - HKLM\..\Run: [nwiz] nwiz.exe /install
O4 - HKLM\..\Run: [NvMediaCenter] RUNDLL32.EXE C:\WINDOWS\system32\NvMcTray.dll,NvTaskbarInit
O4 - HKLM\..\Run: [WinampAgent] "C:\Program Files\Winamp\winampa.exe"
O4 - HKLM\..\Run: [WUSB54Gv4] C:\Program Files\Linksys Wireless-G USB Wireless Network Monitor\InvokeSvc3.exe
O4 - HKLM\..\Run: [SunJavaUpdateSched] "C:\Program Files\Java\jre1.6.0_07\bin\jusched.exe"
O4 - HKLM\..\Run: [!AVG Anti-Spyware] "C:\Program Files\Grisoft\AVG Anti-Spyware 7.5\avgas.exe" /minimized
O4 - HKLM\..\Run: [AVG7_CC] C:\PROGRA~1\Grisoft\AVG7\avgcc.exe /STARTUP
O4 - HKLM\..\Run: [KernelFaultCheck] %systemroot%\system32\dumprep 0 -k
O4 - HKLM\..\Run: [GrooveMonitor] "C:\Program Files\Microsoft Office\Office12\GrooveMonitor.exe"
O4 - HKLM\..\Run: [NeroFilterCheck] C:\Program Files\Common Files\Nero\Lib\NeroCheck.exe
O4 - HKLM\..\Run: [NBKeyScan] "C:\Program Files\Nero\Nero8\Nero BackItUp\NBKeyScan.exe"
O4 - HKLM\..\Run: [EPSON Stylus CX4800 Series] C:\WINDOWS\System32\spool\DRIVERS\W32X86\3\E_FATIADA.EXE /P26 "EPSON Stylus CX4800 Series" /O6 "USB001" /M "Stylus CX4800"
O4 - HKLM\..\Run: [AppleSyncNotifier] C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleSyncNotifier.exe
O4 - HKLM\..\Run: [QuickTime Task] "C:\Program Files\QuickTime\QTTask.exe" -atboottime
O4 - HKLM\..\Run: [iTunesHelper] "C:\Program Files\iTunes\iTunesHelper.exe"
O4 - HKLM\..\Run: [lphcjm5j0e1be] C:\WINDOWS\system32\lphcjm5j0e1be.exe
O4 - HKCU\..\Run: [Steam] "c:\program files\valve\steam\steam.exe" -silent
O4 - HKCU\..\Run: [DAEMON Tools Lite] "C:\Program Files\DAEMON Tools Lite\daemon.exe"
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [BgMonitor_{79662E04-7C6C-4d9f-84C7-88D8A56B10AA}] "C:\Program Files\Common Files\Nero\Lib\NMBgMonitor.exe"
O4 - HKCU\..\Run: [SpybotSD TeaTimer] C:\Program Files\Spybot - Search & Destroy\TeaTimer.exe
O4 - HKUS\S-1-5-19\..\Run: [AVG7_Run] C:\PROGRA~1\Grisoft\AVG7\avgw.exe /RUNONCE (User 'LOCAL SERVICE')
O4 - HKUS\S-1-5-20\..\Run: [AVG7_Run] C:\PROGRA~1\Grisoft\AVG7\avgw.exe /RUNONCE (User 'NETWORK SERVICE')
O4 - HKUS\S-1-5-18\..\Run: [AVG7_Run] C:\PROGRA~1\Grisoft\AVG7\avgw.exe /RUNONCE (User 'SYSTEM')
O4 - HKUS\.DEFAULT\..\Run: [AVG7_Run] C:\PROGRA~1\Grisoft\AVG7\avgw.exe /RUNONCE (User 'Default user')
O4 - Global Startup: Adobe Reader Speed Launch.lnk = C:\Program Files\Adobe\Acrobat 7.0\Reader\reader_sl.exe
O8 - Extra context menu item: E&xport to Microsoft Excel - res://C:\PROGRA~1\MICROS~2\Office12\EXCEL.EXE/3000
O9 - Extra button: (no name) - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O9 - Extra 'Tools' menuitem: Sun Java Console - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O9 - Extra button: Send to OneNote - {2670000A-7350-4f3c-8081-5663EE0C6C49} - C:\PROGRA~1\MICROS~2\Office12\ONBttnIE.dll
O9 - Extra 'Tools' menuitem: S&end to OneNote - {2670000A-7350-4f3c-8081-5663EE0C6C49} - C:\PROGRA~1\MICROS~2\Office12\ONBttnIE.dll
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - C:\PROGRA~1\MICROS~2\Office12\REFIEBAR.DLL
O9 - Extra button: (no name) - {DFB852A3-47F8-48C4-A200-58CAB36FD2A2} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O9 - Extra 'Tools' menuitem: Spybot - Search & Destroy Configuration - {DFB852A3-47F8-48C4-A200-58CAB36FD2A2} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O16 - DPF: {A364AF35-0CDF-41E8-8F3B-E0E55E15EBA1} (Zenturi Active Programs Control) - http://www.programchecker.com/dll/nixon.cab
O18 - Protocol: grooveLocalGWS - {88FED34C-F0CA-4636-A375-3CB6248B04CD} - C:\PROGRA~1\MICROS~2\Office12\GR99D3~1.DLL
O23 - Service: Apple Mobile Device - Apple Inc. - C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
O23 - Service: AVG Anti-Spyware Guard - GRISOFT s.r.o. - C:\Program Files\Grisoft\AVG Anti-Spyware 7.5\guard.exe
O23 - Service: AVG7 Alert Manager Server (Avg7Alrt) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgamsvr.exe
O23 - Service: AVG7 Update Service (Avg7UpdSvc) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgupsvc.exe
O23 - Service: AVG E-mail Scanner (AVGEMS) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgemc.exe
O23 - Service: AVG Firewall (AVGFwSrv) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVG7\avgfwsrv.exe
O23 - Service: Bonjour Service - Apple Inc. - C:\Program Files\Bonjour\mDNSResponder.exe
O23 - Service: FLEXnet Licensing Service - Macrovision Europe Ltd. - C:\Program Files\Common Files\Macrovision Shared\FLEXnet Publisher\FNPLicensingService.exe
O23 - Service: iPod Service - Apple Inc. - C:\Program Files\iPod\bin\iPodService.exe
O23 - Service: Nero BackItUp Scheduler 3 - Nero AG - C:\Program Files\Nero\Nero8\Nero BackItUp\NBService.exe
O23 - Service: NMIndexingService - Nero AG - C:\Program Files\Common Files\Nero\Lib\NMIndexingService.exe
O23 - Service: NVIDIA Display Driver Service (NVSvc) - NVIDIA Corporation - C:\WINDOWS\system32\nvsvc32.exe
O23 - Service: WUSB54Gv4SVC - GEMTEKS - C:\Program Files\Linksys Wireless-G USB Wireless Network Monitor\WLService.exe

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End of file - 8257 bytes

 

ALSO I have been getting a avg-found "threat" every once in a while.
It says
c:\WINDOWS\system32\blphcjm5j0elbe.scr
Trojan horse downloader.generic7.ase

I believe that there is another character after ".ase" but I wrote it down on a paper in a hurry, and idiotically managed to smoother the last letter. Also the 0 in the file name, i am not sure if it is zero or cap-o. I think zero.

I always click "HEAL," and avg then tells me it is healed successfully, but returns upon reboot and activity.
Is this related? and is it a big threat?

EDIT: 10.02.08 Upon starting my computer this morning I have had a few more things. A spybot search and destroy notice stating that the "important registry" has been changed, the blphcjm5j0elbe. i clicked deny changes, but dont know if it did anything.
Also, "Trojan hourse Generic 11.AMYP" was detected and it said that it healed it(AVG).
EDIT: AVG antispyware also picked up "Backdoor.Frauder.eo" I think I saw this before on a prior scan, and I deleted or "healed" it. This time AVGantispyware recommended i quarantine it, which I did.
EDIT: AVG keeps popping up and giving me the "while opening file c:\windows\...blphcjm5..." (same as before) but this time the file was .ASEI, not .ase. i dont know if this maters or what, but AVG keeps telling me it heals it but it comes back.