trojan horse generic_c.0YJ in system, can't remove file

I have been trying to fix a friend's computer, and there is one file that we know is the problem that won't come off. I have tried everything I know how and so have been searching the net, but only thing I could find was this: http://itknowledgeexchange.techtarget.com/itanswers/help-my-personal-settings-have-dissapeared/

So now I have decided to make another entry about it. The topic was posted on June 27, 2008, so this may be a fairly new virus that other's have not encountered. The file itself is planted in the C:WINDOWS/system32 folder and everytime we restart it reappears there. I am asking for help, included is the computer's HijackThis log, the file I am looking to remove is:

" C:\WINDOWS\system32\lphcpsej0et5j.exe " and on AVG it registers on the residential shield as trojan horse generic_c.0YJ and because of it, all of my friend's personal settings are gone.

Thank you.

 

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I have already done the majority of the first stuff, but not clean the startup programs with C_Cleaner. I've had a problem installing Spybot, it was like the server hosts wouldn't connect to it. I'll try downloading and running it again and see where that gets me.