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You have been seriously infected. I'd be for a reformat and start afresh because your chances of cleaning it all out and retaining good clean operation is probaly just about nil. Those damn things get in and destroy all sorts of critical software links.
If your earlier made image is clean then it's the best start point as it will have all the drivers and configuration your PC needs. Reformat and reimage first. If it fails to fix it because it is already polluted then revert back to a clean install from the disks and license I hope you have got.
AVG works quite happily on Win7, been running it for years. Get it in fast, as soon as you have completed the basic rebuild and update it. Turn on your Firewalls, I hope your router has an inbuilt one as well, gets rid of the first wave of trash mostly.
I find that if the PC is totally trashed by Adware, BHO's and trojans it is just about impossible to clean up to a safe status. The Softwares mentioned above, Malwarebytes, ADWare cleaner etc are all reputable but there are heaps of other so-called Fixit programs that are just carriers of more of the same stuff.
If you want to have a go at a clean up first then start here.
MBAM, (MalwareBytes AntiMalware) has a free scanner which is very good IF your curent PC infestation will let you run it. I download it on another PC, then copy it across on a USB stick to the desktop and let her rip. The infestation may try to stop the update but it should still run and give you a start on a cleanup.
McAfee also has a free 'Stinger' as they call it. Do the same for that one.
I have a few other more esoteric pieces of software from suppliers that can be really nasty on viruses but they have to be applied with caution.
Keep us posted
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