tyme, all good advise and thanks for the info! Just read your sticky, I didn't even know about the library, let alone the computer security section.
Vanya, also very good advise. Many of the scanners will try to use the leftover, malicious proxy setting from Internet Explorer to connect for updates. I'm guessing that will fix his update problem.
Brent, if nothing else works, try to update Spybot manually with this link:
http://www.spybotupdates.biz/updates...d_includes.exe
I've been seeing a lot of viruses in the last few months, especially on Windows XP systems. Doesn't seem to matter if they're locked down and have all the latest MS security updates. It could be Adobe's fault, but I'm starting to suspect Java.