Trojan Horse

Looks like a JAVA exploit. Download and run a scan with Hitman Pro. It should be able to remove it.
Incase it fails, try MBAM.

rjmach download TFC by Old Timer TFC - Temp File Cleaner by OldTimer - Geeks to Go Forums and save it to your desktop.
Save any unsaved work. TFC will close ALL open programs including your browser!
Right-click on the file and choose Run As Administrator.
Click the Start button to begin the cleaning process and let it run uninterrupted to completion.

Important! If TFC prompts you to reboot, please do so immediately. If not prompted, manually reboot the machine anyway to ensure a complete clean.

TFC (Temp File Cleaner) will clear out all temp folders for all user accounts (temp, IE temp, java, FF, Opera, Chrome, Safari), including Administrator, All Users, LocalService, NetworkService, and any other accounts in the user folder. It also cleans out the %systemroot%\temp folder and checks for .tmp files in the %systemdrive% root folder, %systemroot%, and the system32 folder (both 32bit and 64bit on 64bit OSs). It shows the amount removed for each location found (in bytes) and the total removed (in MB). Before running, it will stop Explorer and all other running apps. When finished, if a reboot is required the user must reboot to finish clearing any in-use temp files.

Malware in octet-stream application
ThreatExpert Report: Trojan-Downloader.Java.Agent.hi, Mal/JavaKC-A, Mal/JavaKC-B, Mal/JavaKC-C..

Uninstall any old Java using "Programs and Features"
Next...
Update your Java to the latest version of Java Runtime Environment (JRE) 6. Scroll down to where it says "Java Runtime Environment (JRE) 6u21 allows end-users to run Java applications".
Click the "Download" button to the right.
Check the box that says: "Accept License Agreement".
The page will refresh.