Everytime I want to open a directory (Folders, My Computer, Hard Drive,etc.) that's not in the desktop, an error shows up.
"System Error! Attention, System Administrator! Some dangerous trojan horses detected in your system. Microsoft Windows XP files corrupted.
This may lead to the destruction of important files in C:/Windows.0. Download protection software now!

Click OK to download antispyware. (Recommended)"

That's a dialog box error, to be precise.
Here's my HJT Log:
Logfile of Trend Micro HijackThis v2.0.2
Scan saved at 9:16:14 PM, on 6/15/2008
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v7.00 (7.00.6000.16674)
Boot mode: Normal

Running processes:
C:\WINDOWS.0\System32\smss.exe
C:\WINDOWS.0\system32\winlogon.exe
C:\WINDOWS.0\system32\services.exe
C:\WINDOWS.0\system32\lsass.exe
C:\WINDOWS.0\system32\svchost.exe
C:\WINDOWS.0\System32\svchost.exe
C:\WINDOWS.0\system32\svchost.exe
C:\WINDOWS.0\system32\spoolsv.exe
C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
C:\PROGRA~1\AVG\AVG8\avgwdsvc.exe
C:\Program Files\Bonjour\mDNSResponder.exe
C:\Program Files\Common Files\InterVideo\DeviceService\DevSvc.exe
C:\Program Files\Google\Common\Google Updater\GoogleUpdaterService.exe
C:\Program Files\Common Files\LightScribe\LSSrvc.exe
C:\Program Files\Common Files\Microsoft Shared\VS7DEBUG\MDM.EXE
C:\Program Files\Nakido\nakido.exe
C:\WINDOWS.0\system32\HPZipm12.exe
C:\WINDOWS.0\system32\svchost.exe
C:\Program Files\Common Files\Ulead Systems\DVD\ULCDRSvr.exe
C:\PROGRA~1\AVG\AVG8\avgam.exe
C:\PROGRA~1\AVG\AVG8\avgrsx.exe
C:\PROGRA~1\AVG\AVG8\avgnsx.exe
C:\PROGRA~1\AVG\AVG8\avgemc.exe
C:\WINDOWS.0\Explorer.EXE
C:\WINDOWS.0\system32\rundll32.exe
C:\WINDOWS.0\VistaDrive\VistaDrive.exe
C:\PROGRA~1\AVG\AVG8\avgtray.exe
C:\WINDOWS.0\system32\hkcmd.exe
C:\WINDOWS.0\system32\igfxpers.exe
C:\Program Files\Java\jre1.6.0_05\bin\jusched.exe
C:\Program Files\Unlocker\UnlockerAssistant.exe
C:\Program Files\HP\HP Software Update\HPWuSchd2.exe
C:\Program Files\iTunes\iTunesHelper.exe
C:\WINDOWS.0\system32\ctfmon.exe
H:\Program Files\Veoh Networks\Veoh\VeohClient.exe
C:\Program Files\HP\Digital Imaging\bin\hpqtra08.exe
C:\Program Files\Sony Corporation\Picture Package\Picture Package Menu\SonyTray.exe
C:\Program Files\Sony\Sony Picture Utility\PMBCore\SPUVolumeWatcher.exe
C:\Program Files\iPod\bin\iPodService.exe
C:\Program Files\HP\Digital Imaging\bin\hpqimzone.exe
C:\Program Files\HP\Digital Imaging\bin\hpqSTE08.exe
C:\PROGRA~1\MOZILL~1\FIREFOX.EXE
H:\Program Files\BitComet\BitComet.exe
H:\Program Files\Ashampoo\Ashampoo Movie Shrink & Burn 3\bin\ShrinkAndBurn3.exe
H:\Program Files\Ashampoo\Ashampoo Movie Shrink & Burn 3\bin\amf_slv.exe
h:\Program Files\Trend Micro\HijackThis\HijackThis.exe

R1 - HKCU\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = http://go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Internet Settings,ProxyServer = :
R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Internet Settings,ProxyOverride = local
O2 - BHO: Yahoo! Toolbar Helper - {02478D38-C3F9-4EFB-9B51-7695ECA05670} - C:\Program Files\Yahoo!\Companion\Installs\cpn\yt.dll
O2 - BHO: BitComet ClickCapture - {39F7E362-828A-4B5A-BCAF-5B79BFDFEA60} - H:\Program Files\BitComet\tools\BitCometBHO_1.2.2.28.dll
O2 - BHO: AVG Safe Search - {3CA2F312-6F6E-4B53-A66E-4E65E497C8C0} - C:\Program Files\AVG\AVG8\avgssie.dll
O2 - BHO: BhoApp Class - {5F920865-38C9-40DA-8FCF-D9DC83F84EC5} - C:\WINDOWS.0\system32\tupdfo.dll
O2 - BHO: SSVHelper Class - {761497BB-D6F0-462C-B6EB-D4DAF1D92D43} - C:\Program Files\Java\jre1.6.0_05\bin\ssv.dll
O2 - BHO: AVGTOOLBAR - {A057A204-BACC-4D26-9990-79A187E2698E} - C:\PROGRA~1\AVG\AVG8\AVGTOO~1.DLL
O2 - BHO: Google Toolbar Notifier BHO - {AF69DE43-7D58-4638-B6FA-CE66B5AD205D} - C:\Program Files\Google\GoogleToolbarNotifier\2.1.1119.1736\swg.dll
O3 - Toolbar: AVGTOOLBAR - {A057A204-BACC-4D26-9990-79A187E2698E} - C:\PROGRA~1\AVG\AVG8\AVGTOO~1.DLL
O3 - Toolbar: Yahoo! Toolbar - {EF99BD32-C1FB-11D2-892F-0090271D4F88} - C:\Program Files\Yahoo!\Companion\Installs\cpn\yt.dll
O3 - Toolbar: Veoh Browser Plug-in - {D0943516-5076-4020-A3B5-AEFAF26AB263} - H:\Program Files\Veoh Networks\Veoh\Plugins\reg\VeohToolbar.dll
O4 - HKLM\..\Run: [BluetoothAuthenticationAgent] rundll32.exe bthprops.cpl,,BluetoothAuthenticationAgent
O4 - HKLM\..\Run: [VistaDrive] C:\WINDOWS.0\VistaDrive\VistaDrive.exe
O4 - HKLM\..\Run: [AVG8_TRAY] C:\PROGRA~1\AVG\AVG8\avgtray.exe
O4 - HKLM\..\Run: [Cmaudio] RunDll32 cmicnfg.cpl,CMICtrlWnd
O4 - HKLM\..\Run: [igfxtray] C:\WINDOWS.0\system32\igfxtray.exe
O4 - HKLM\..\Run: [igfxhkcmd] C:\WINDOWS.0\system32\hkcmd.exe
O4 - HKLM\..\Run: [igfxpers] C:\WINDOWS.0\system32\igfxpers.exe
O4 - HKLM\..\Run: [SunJavaUpdateSched] "C:\Program Files\Java\jre1.6.0_05\bin\jusched.exe"
O4 - HKLM\..\Run: [UnlockerAssistant] "C:\Program Files\Unlocker\UnlockerAssistant.exe"
O4 - HKLM\..\Run: [HP Software Update] C:\Program Files\HP\HP Software Update\HPWuSchd2.exe
O4 - HKLM\..\Run: [QuickTime Task] "C:\Program Files\QuickTime\QTTask.exe" -atboottime
O4 - HKLM\..\Run: [iTunesHelper] "C:\Program Files\iTunes\iTunesHelper.exe"
O4 - HKLM\..\Run: [UVS11 Preload] C:\Program Files\Ulead Systems\Ulead VideoStudio 11\uvPL.exe
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS.0\system32\ctfmon.exe
O4 - HKCU\..\Run: [Hide IP Platinum] C:\Program Files\Hide IP Platinum\hideippla.exe
O4 - HKCU\..\Run: [ProxyWay] C:\Program Files\ProxyWay\proxyway.exe
O4 - HKCU\..\Run: [Veoh] "H:\Program Files\Veoh Networks\Veoh\VeohClient.exe" /VeohHide
O4 - HKUS\S-1-5-19\..\RunOnce: [nltide_3] rundll32 advpack.dll,LaunchINFSectionEx nLite.inf,C,,4,N (User 'LOCAL SERVICE')
O4 - HKUS\S-1-5-20\..\RunOnce: [nltide_3] rundll32 advpack.dll,LaunchINFSectionEx nLite.inf,C,,4,N (User 'NETWORK SERVICE')
O4 - HKUS\S-1-5-18\..\RunOnce: [nltide_3] rundll32 advpack.dll,LaunchINFSectionEx nLite.inf,C,,4,N (User 'SYSTEM')
O4 - HKUS\.DEFAULT\..\RunOnce: [nltide_3] rundll32 advpack.dll,LaunchINFSectionEx nLite.inf,C,,4,N (User 'Default user')
O4 - Startup: Picture Motion Browser Media Check Tool.lnk = C:\Program Files\Sony\Sony Picture Utility\PMBCore\SPUVolumeWatcher.exe
O4 - Global Startup: HP Digital Imaging Monitor.lnk = C:\Program Files\HP\Digital Imaging\bin\hpqtra08.exe
O4 - Global Startup: HP Image Zone Fast Start.lnk = C:\Program Files\HP\Digital Imaging\bin\hpqthb08.exe
O4 - Global Startup: Picture Package Menu.lnk = C:\Program Files\Sony Corporation\Picture Package\Picture Package Menu\SonyTray.exe
O8 - Extra context menu item: E&xport to Microsoft Excel - res://C:\PROGRA~1\MICROS~1\OFFICE11\EXCEL.EXE/3000
O9 - Extra button: (no name) - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_05\bin\ssv.dll
O9 - Extra 'Tools' menuitem: Sun Java Console - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_05\bin\ssv.dll
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - C:\PROGRA~1\MICROS~1\OFFICE11\REFIEBAR.DLL
O9 - Extra button: BitComet - {D18A0B52-D63C-4ed0-AFC6-C1E3DC1AF43A} - res://H:\Program Files\BitComet\tools\BitCometBHO_1.2.2.28.dll/206 (file missing)
O9 - Extra button: (no name) - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS.0\Network Diagnostic\xpnetdiag.exe
O9 - Extra 'Tools' menuitem: @xpsp3res.dll,-20001 - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS.0\Network Diagnostic\xpnetdiag.exe
O16 - DPF: {30528230-99f7-4bb4-88d8-fa1d4f56a2ab} (YInstStarter Class) - C:\Program Files\Yahoo!\Common\yinsthelper.dll
O18 - Protocol: linkscanner - {F274614C-63F8-47D5-A4D1-FBDDE494F8D1} - C:\Program Files\AVG\AVG8\avgpp.dll
O18 - Protocol: skype4com - {FFC8B962-9B40-4DFF-9458-1830C7DD7F5D} - C:\PROGRA~1\COMMON~1\Skype\SKYPE4~1.DLL
O20 - AppInit_DLLs: interceptor.dll,avgrsstx.dll,
O23 - Service: Apple Mobile Device - Apple, Inc. - C:\Program Files\Common Files\Apple\Mobile Device Support\bin\AppleMobileDeviceService.exe
O23 - Service: AVG8 E-mail Scanner (avg8emc) - AVG Technologies CZ, s.r.o. - C:\PROGRA~1\AVG\AVG8\avgemc.exe
O23 - Service: AVG8 WatchDog (avg8wd) - AVG Technologies CZ, s.r.o. - C:\PROGRA~1\AVG\AVG8\avgwdsvc.exe
O23 - Service: Bonjour Service - Apple Inc. - C:\Program Files\Bonjour\mDNSResponder.exe
O23 - Service: Capture Device Service - InterVideo Inc. - C:\Program Files\Common Files\InterVideo\DeviceService\DevSvc.exe
O23 - Service: Google Updater Service (gusvc) - Google - C:\Program Files\Google\Common\Google Updater\GoogleUpdaterService.exe
O23 - Service: iPod Service - Apple Inc. - C:\Program Files\iPod\bin\iPodService.exe
O23 - Service: LightScribeService Direct Disc Labeling Service (LightScribeService) - Hewlett-Packard Company - C:\Program Files\Common Files\LightScribe\LSSrvc.exe
O23 - Service: Nakido - Nakido - C:\Program Files\Nakido\nakido.exe
O23 - Service: Pml Driver HPZ12 - HP - C:\WINDOWS.0\system32\HPZipm12.exe
O23 - Service: ServiceLayer - Nokia. - C:\Program Files\PC Connectivity Solution\ServiceLayer.exe
O23 - Service: Ulead Burning Helper (UleadBurningHelper) - Ulead Systems, Inc. - C:\Program Files\Common Files\Ulead Systems\DVD\ULCDRSvr.exe

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