If strange things start happening on anything at all, then scan your system for malware immediately, before you do anything else. This might allow you to save the system.
If you have malware on your system, then it is more or less impossible to troubleshoot various things.
You already found malware on your system;
http://www.sevenforums.com/general-discussion/155213-folder-problem.html
and according to the log you posted you only ran a quick scan and did not remove the malware;
Windows 6.1.7600
Internet Explorer 9.0.8112.16421
6/4/2011 1:15:35 πμ
mbam-log-2011-04-06 (01-15-29).txt
Scan type: Quick scan
Objects scanned: 163649
Time elapsed: 3 minute(s), 43 second(s)
Memory Processes Infected: 0
Memory Modules Infected: 0
Registry Keys Infected: 7
Registry Values Infected: 0
Registry Data Items Infected: 0
Folders Infected: 0
Files Infected: 6
Memory Processes Infected:
(No malicious items detected)
Memory Modules Infected:
(No malicious items detected)
Registry Keys Infected:
HKEY_CURRENT_USER\SOFTWARE\JCFSE7V7Z1 (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\JP595IR86O (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\NtWqIVLZEWZU (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\SMH2B46TDP (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\Z30KYPG3WS (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\ZE18MW23GY (Trojan.FakeAlert) -> No action taken.
HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Internet Settings\Zones\ (Hijack.Zones) -> No action taken.
Registry Values Infected:
(No malicious items detected)
Registry Data Items Infected:
(No malicious items detected)
Folders Infected:
(No malicious items detected)
Files Infected:
c:\Users\Public\documents\Server\admin.txt (Malware.Trace) -> No action taken.
c:\Users\Public\documents\Server\server.dat (Malware.Trace) -> No action taken.
c:\Windows\hosts (Trojan.Agent) -> No action taken.
c:\Windows\Tasks\{22116563-108c-42c0-a7ce-60161b75e508}.job (Trojan.Downloader) -> No action taken.
c:\Windows\Tasks\{35dc3473-a719-4d14-b7c1-fd326ca84a0c}.job (Trojan.Downloader) -> No action taken.
c:\Windows\Tasks\{bbaeaeaf-1275-40e2-bd6c-bc8f88bd114a}.job (Trojan.Downloader) -> No action taken.
There is no point in trying to fix things once you have been infected like that, you will not normally be able to find the cause of the problem, and even if you can, there is no knowing what other damage has been done.
Regards....Mike Connor
