recovering from a worm

Hey. 2 days ago I booted my pc up and got a msg saying "Windows cannot find c:\windows\system32\~.exe. So I close the box then for some reason I tried to bring task manager up and couldn't. Went online, look for fixes, find out i cant get into registry either. I know i have a virus by then. Norton wont work, either would the 3 other scanners I download. SPybot and adware both find malware, i follow through. I tried to run my world of warcraft, launcher is gone along with some other .exe files from other apps. I find Avast, run it, and find out I have a worm. Now I think I have it taken care of, but this windows error box is driving me nuts. IS something else wrong with my pc. I really dont want to reformat. Just want to know if there is anything I Can do to fix it.
Here is my hijackthis log:

Logfile of Trend Micro HijackThis v2.0.2
Scan saved at 20:37:21, on 12/12/2008
Platform: Windows XP SP3 (WinNT 5.01.2600)
MSIE: Internet Explorer v7.00 (7.00.6000.16762)
Boot mode: Normal

Any help is needed. My hair is thinning already, don't want to pull out more. :cry

Forum Administrator Edit: PLease read this link http://forums.majorgeeks.com/showthread.php?t=38752

 

Welcome to Major Geeks!

Being that you have experienced a malware infection, please follow the instructions in the below link and, opening a new thread in the Malware Forum, attach the requested logs when you finish these instructions. You need a clean bill of health from the Malware Fighters before we start to look at other potential issues for the problems you are experiencing.

READ & RUN ME FIRST. Malware Removal Guide

• If something does not run, write down the info to explain to us later but keep on going.
  Do not assume that because one step does not work that they all will not.
  
  Notes:
• If you run into problems trying to run the READ & RUN ME or any of the scans in normal boot mode. You can run steps in safe boot mode but make sure you tell us what you did later when you post logs. See the below if you do not know how to boot in safe mode:
  Starting your computer in Safe mode
• If you have problems downloading on the problem PC, download the tools on another PC and burn to a CD. Then copy them to the problem PC. You will have to skip getting updates if (and only if) your internet connection does not work. Yes you could use a flash drive too but flash drives are writeable and infections can spread to them.