Computer falling apart pleeeease HELP!!!!

Hi,
I have BIG trouble with my computer. I am no specialist so I will just describe the symptoms. My computer keeps reporting that:"Your computer is in danger. Windows security center has detected spyware....it is highly recomended that you run spyware removal programs." It displays a red bubble with white cross on the main panel. It also keeps saying something else like "Virus infection detected" on the same bubble. On my screen pops up a message "System Crashed, Critical error, windows halted" but it doesn't halt at all and "Register change detected"... I am czech and have czech version of Windows, but all these reports are written in english so I think it is not reported by Windows at all. I guess it is some kind of W32/Rbot with a few friendly viruses and I've read somewhere that it is caused by some XPUpdate.exe and that I should shut it down in Task Manager or how it is called. But I cant! When I press CTRL+ALT+DLT or CTRL+SHIFT+ESC it says that Task Manager was not allowed by computer administrator. Which is not true! When I try to reboot into safe mode and log on as an administrator, all my icons and the main panel disappear and I can't do a thing! It also says when I run AVG that registry changes are not allowed by admin!
Please help! I have disconnected from the internet to be sure nobody can control the computer from outside (I am writing this from my bro's comp) and have ThreatFire and AVG installed (but my Firewall doesn't work and I didn't have either of them before I got the virus, such an idiot I am!) I tried Autoruns.exe but XPUpdate.exe wasn't on the list so I just can't stop it.
PLEEEEEAAAASE HEEELP!!!!!:cry

 

Thank you for your help and quick reply!
However the virus has somehow disabled all other user accounts except for mine and even if I take care of all the viruses I got (AVG now removes about 5 Trojans a day) I doubt that my comuter will ever be the same cause those worms and viruses have caused a lot of damage that could be irreversible. AVG seems to have taken care of some of the problems for now so just I'll copy important data on CD's and external drive and format HDD, while I still can make the backup.
Thanks for your advices, I'll be sure to keep them in mind the next time I have some trouble and this time I'll install some good antivirus BEFORE I get something (AVG seems to be able to fix the symptoms of some of the viruses but can't remove the VIRUS at all.)

Again thanks, thanks, thanks
MarcusTheAbsolute