remove nutcracker virus

I found via avast, that my computer has the nutcracker family virus on it. It cannot remove it. My computer has been running slower and slower lately and frequently freezing up. I have a Dell Dimension desktop with windows xp. Now, when I boot up, I get the wallpaper and start menu bar but no icons. The start menu does not work and I have to resort to pushing the computer's button to turn off. I think it may be this virus screwing everything up. I tried to back up, but have been unsuccessful as when my external harddrive is connected it is not reading it (only for back up....the lights are on and my computer automatically wants to dowload the photos on the hard drive onto my computer so I know it CAN read it, just not with backing up. I'm afraid of losing everything. Most importantly, my WORD files. Suggestions? How can I get this virus off? Do I have to back up the drive and uninstall and reinstall the operating system? I've run spyware center also and delted all corupt files, but not helping. I am currently in safe mode writing to you. Don't know if going online in safe mode is smart or not. I really am computer stupid. You'lll have to walk me through this with baby steps. Thank you.