Windows XP sp3 Vs. PCTools

After trying to clean a virus from my wifes PC I gave up and reformated (removing the partition) then reloaded Windows XP Pro. I loaded her PCtools Spyware Doctor with Antivirus, the PCtools firewall and Threatfire from a disc. I even updated her Bios after the format and reload before going back onto the internet. Then I went on-line for the PCtools updates. After that I ran a scan and the system was clean.

After SP2 I ran the scan again, clean system. But after SP3 was loaded I ran another scan and PCtools found 7 high risk items "Trojan-spy.Pophot.WX" and said that key Windows files had been corrupted. One of these files is C:\WINDOWS\system32\rundll.exe and it's been removed.

Could this be a false respons from PCtools? Did SP3 change this and other files in a way that looked like a virus? If so I can restore those deleted files.

The wifes PC has been plagued by some nasty virus that came back and reinfected it after the first reformatting and reloading. If it's back how could it get back on if we don't click any popups or go to any web sites other than microsoft and pctools?

Has anyone else had a problem with SP3? :confused