I did watch how this bug (does it have a name yet?) worked for 3 days (and nights), while researching how to read the HJT logs, etc. Here is what I figured out...
I would strongly recommend the microsoft anti-spyware utility, it really put a check on this bug. this bug replicates itself 2-3 times an hour into another of those mystery 3-letter windows or system files, and adds itself to startup. the anti-spyware caught and allowed me to block all of those from happening.
All you folks with hundreds of those random 3-letter files in your Hijack logs, this will stop it from infecting you more.
Also, find the mystery 3 letter process running in task manager (look it up on google to be sure its not a real app), and kill the process. this seemed to stop the pop up "danger spyware" windows, and the spawning. Now you can get down to working on cleaning the system with what I have seen the techs here say...
Personally, I chose to scratch and reload. The main reason is I just finished building a new PC, and was gonna kick the infected system down to menial tasks. So for me it was not a huge deal to lose all the settings etc. on that machine. I was able to back up my critical data and get it off the machine, even while infected. getting a totally fresh system was the milk and cookies.
I know most people cant afford to lose everything with a scratch load, which is why I offer what I learned from this. Hopefully it will help some of you lessen the impact of this nasty little bugger.
The techs here seem very knowledgeable and and friendly, and just reading what they did for others taught me much. I am spreading the gospel of HJT, cleanup, and the special settings for adaware, etc to the IT guys I know. Thanx for helping!