ispynow

Hi I am running Windows XP Home Edition on my desktop and when I logged on this morning, I noticed that another administrator account had been made (all containing letters and numbers). I went into control panel and deleted the account, and started a scan with AVG 8.0 Free Edition. However, it didn't find anything. After checking the AVG logs it also said that it wasn't able to connect to the update server since November 21st. I also kept getting a pop up from Windows Defender stating that it has found spyware on my computer called "Spyware.Ispynow" obviously, and gives me 3 options which are "Unblock", "Keep blocking" and "Get protection". "Get protection" is the only option that is available and it brought me to a site that wants me to pay for the removal of the spyware *rolls eyes*.
After that I went searching on the internet on how to get rid of this, and every window that I open keeps on being closed, so now I can't even get on the internet on my desktop.
So I got frustrated and eventually my whole computer froze up and I had to hold down the power button to turn the computer off. I was just wondering what would be the first couple of steps in order to get rid of this spyware called "spyware.Ispynow"?

Split into it's own topic, please use this topic for your problems.

Please download SilentRunners from here:
http://www.silentrunners.org/Silent%20Runners.zip
Unzip it to the desktop and double-click on it. If you get any kind of warning message about scripts, please choose to allow the script to run. When the scan is finished, a message will pop up and a logfile will have been created on the desktop. Please post the entire contents of this logfile for me to see.

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