That does sound like a big problem.
My first instinct would be to save all the files I think I need to another drive before doing anything else. If the drive itself is actually going bad causing these issues, it may not have long to live. Course it could be virus related as well, I'd check that out.
Then once you are backed up to your satisfaction, maybe play with it but resetting all persmissions from the root is probably just going to do more damage to the working windows install (Assuming your talking about the root folder).
Saying that you don't have permissions for all files, even ones you created in non protected areas sounds like either your account ID was changed or that the owner ID was changed on all the files during that mystery operation... Would take some serious spelunking to probably tell what is going on for sure...
You can try using the Take Ownership shortcut on folders of personal files, just don't use it on the root or the windows folder. Take Ownership Shortcut