windows xp faulty acer wont help

i am having issues with my laptop
basically it has win xp installed
here is the best chronoligical order i can give

i had avg free zonealarms free firewall (which replaced norton) adaware

free ware i downloaded was serifsoftwares publishing package

all working fine then all of a sudden msn stops working, you know how usually it will show the last logged in account it wasnt doing that no more. my adaware definitions which were updated 2 days prior had gone back in time by 60 days. the registration wizard for the serif software page plus had disappeared and i got erros saying it couldnt locate

also you know you get auto updates and windows updates, i couldnt get any of them couldnt even download it as it kept circling round the process to download it

acer had me restore factory settings. all ok i downloaded avg free and just activated the windows firewall

but now msn doesnt work and certain sites like gmail i cant access
i cant get any updates either

what can i do
acer says that i must speak with microsoft but its soooo hard to get through
would getting an upgrade to the lates os be best

laptop was only bought may 06 so its still quite new

what are my options

 

seems i posted in haste
i spent and hour and 15 mins total queuing and speaking with microsoft tech support who seemed to have resolved the problem.

if it fails i will beback to you
guys