I am unable to load SP2. The problem seems to be that the system is unable to backup certain registry keys. The setupapi.log shows that it is unable to backup .cpp\persistenthandler, .cxx\persistent handler, and .def\persistenthandler. I have changed the permision of these keys per the Microsoft instructions but it still hangs up and says "Access Denied" after loading SP2.You have managed to get INFECTED with a nasty worm...run all your protection programs in safemode and then DLoad and run Hijack This and post the log here...
List all the scans you ran.Not sure what running protection programs in safemode means.  I run NOD32. Here is the logfile from Hijack This:

Logfile of HijackThis v1.99.1
Scan saved at 6:40:19 PM, on 2/11/2007
Platform: Windows XP SP1 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP1 (6.00.2800.1106)

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\PROGRAM Files\Common Files\Acronis\Schedule2\schedul2.exe
C:\WINDOWS\System32\cisvc.exe
C:\Program Files\Eset\nod32krn.exe
C:\PROGRA~1\NORTON~1\NORTON~1\NPROTECT.EXE
C:\PROGRA~1\NORTON~1\NORTON~1\SPEEDD~1\NOPDB.EXE
C:\WINDOWS\System32\svchost.exe
C:\Program Files\Common Files\Symantec Shared\CCPD-LC\symlcsvc.exe
C:\Program Files\Common Files\TiVo Shared\Beacon\TiVoBeacon.exe
C:\Program Files\Common Files\Ulead Systems\DVD\ULCDRSvr.exe
C:\WINDOWS\System32\WgaTray.exe
C:\WINDOWS\Explorer.EXE
C:\Program Files\Eset\nod32kui.exe
C:\Program Files\Common Files\Real\Update_OB\realsched.exe
C:\Program Files\Common Files\TiVo Shared\Transfer\TiVoTransfer.exe
C:\Program Files\TiVo\Desktop\TiVoServer.exe
C:\Program Files\Sony Handheld\HOTSYNC.EXE
C:\WINDOWS\system32\ntvdm.exe
C:\Program Files\Internet Explorer\iexplore.exe
C:\Program Files\Internet Explorer\iexplore.exe
C:\Documents and Settings\Dave\Desktop\HijackThis.exe

R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://www.hotsheet.com/
R0 - HKCU\Software\Microsoft\Internet Explorer\Main,Local Page =
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Local Page =
R1 - HKCU\Software\Microsoft\Internet Connection Wizard,ShellNext = http://www.dellnet.com/
R0 - HKCU\Software\Microsoft\Internet Explorer\Toolbar,LinksFolderName =
R3 - Default URLSearchHook is missing
O1 - Hosts: 127.0.0.0 localhost
O1 - Hosts: 127.0.0.2 auditmypc.com
O1 - Hosts: 127.0.0.4 bulletproofsoft.net
O1 - Hosts: 127.0.0.5 camtech2000.net
O1 - Hosts: 127.0.0.6 cexx.org
O1 - Hosts: 127.0.0.7 computercops.us
O1 - Hosts: 127.0.0.8 ct7support.com
O1 - Hosts: 127.0.0.9 doxdesk.com
O1 - Hosts: 127.0.0.20 kellys-korner-xp.com
O1 - Hosts: 127.0.0.21 kephyr.com
O1 - Hosts: 127.0.0.24 lurkhere.com
O1 - Hosts: 127.0.0.25 majorgeeks.com
O1 - Hosts: 127.0.0.26 merijn.org
O1 - Hosts: 127.0.0.27 mjc1.com
O1 - Hosts: 127.0.0.28 moosoft.com
O1 - Hosts: 127.0.0.29 mvps.org
O1 - Hosts: 127.0.0.30 net-integration.net
O1 - Hosts: 127.0.0.31 noadware.net
O1 - Hosts: 127.0.0.32 no-spybot.com
O1 - Hosts: 127.0.0.33 onlinepcfix.com
O1 - Hosts: 127.0.0.34 pchell.com
O1 - Hosts: 127.0.0.35 pestpatrol.com
O1 - Hosts: 127.0.0.36 safer-networking.org
O1 - Hosts: 127.0.0.37 secure.spykiller.com
O1 - Hosts: 127.0.0.38 secureie.com
O1 - Hosts: 127.0.0.39 security.kolla.de
O1 - Hosts: 127.0.0.40 spybot.info
O1 - Hosts: 127.0.0.41 spychecker.com
O1 - Hosts: 127.0.0.42 spychecker.com
O1 - Hosts: 127.0.0.43 spycop.com
O1 - Hosts: 127.0.0.44 spyguard.com
O1 - Hosts: 127.0.0.45 spykiller.com
O1 - Hosts: 127.0.0.46 spyware.co.uk
O1 - Hosts: 127.0.0.47 spyware-cop.com
O1 - Hosts: 127.0.0.48 spywareinfo.com
O1 - Hosts: 127.0.0.49 spywarenuker.com
O1 - Hosts: 127.0.0.50 spywareremove.com
O1 - Hosts: 127.0.0.51 spywareremove.com
O1 - Hosts: 127.0.0.52 stopzillapro.com
O1 - Hosts: 127.0.0.53 sunbelt-software.com
O1 - Hosts: 127.0.0.54 thiefware.com
O1 - Hosts: 127.0.0.55 tomcoyote.org
O1 - Hosts: 127.0.0.56 unwantedlinks.com
O1 - Hosts: 127.0.0.57 webattack.com
O1 - Hosts: 127.0.0.58 wilders.org
O1 - Hosts: 127.0.0.59 www.auditmypc.com
O1 - Hosts: 127.0.0.60 www.bulletproofsoft.net
O1 - Hosts: 127.0.0.61 www.cexx.org
O1 - Hosts: 127.0.0.62 www.computercops.us
O1 - Hosts: 127.0.0.63 www.ct7support.com
O1 - Hosts: 127.0.0.64 www.doxdesk.com
O1 - Hosts: 127.0.0.65 www.eblocs.com
O1 - Hosts: 127.0.0.66 www.enigmasoftwaregroup.com
O1 - Hosts: 127.0.0.67 www.free-spyware-scan.com
O1 - Hosts: 127.0.0.68 www.free-web-browsers.com
O1 - Hosts: 127.0.0.69 www.grc.com
O1 - Hosts: 127.0.0.70 www.grisoft.com
O1 - Hosts: 127.0.0.71 www.hackfaq.org
O1 - Hosts: 127.0.0.72 www.hazeleger.net
O1 - Hosts: 127.0.0.73 www.javacoolsoftware.com
O1 - Hosts: 127.0.0.74 www.kellys-korner-xp.com
O1 - Hosts: 127.0.0.75 www.kephyr.com
O1 - Hosts: 127.0.0.78 www.lurkhere.com
O1 - Hosts: 127.0.0.79 www.majorgeeks.com
O1 - Hosts: 127.0.0.80 www.merijn.org
O1 - Hosts: 127.0.0.81 www.mjc1.com
O1 - Hosts: 127.0.0.82 www.moosoft.com
O1 - Hosts: 127.0.0.83 www.mvps.org
O1 - Hosts: 127.0.0.84 www.net-integration.net
O1 - Hosts: 127.0.0.85 www.noadware.net
O1 - Hosts: 127.0.0.86 www.no-spybot.com
O1 - Hosts: 127.0.0.87 www.onlinepcfix.com
O1 - Hosts: 127.0.0.88 www.pchell.com
O1 - Hosts: 127.0.0.89 www.pestpatrol.com
O1 - Hosts: 127.0.0.94 www.spychecker.com
O1 - Hosts: 127.0.0.95 www.spychecker.com
O1 - Hosts: 127.0.0.96 www.spycop.com
O1 - Hosts: 127.0.0.97 www.spyguard.com
O1 - Hosts: 127.0.0.98 www.spykiller.com
O1 - Hosts: 127.0.0.99 www.spyware.co.uk
O2 - BHO: Adobe PDF Reader LINK Helper - {06849E9F-C8D7-4D59-B87D-784B7D6BE0B3} - C:\Program Files\Adobe\Acrobat 7.0\ActiveX\AcroIEHelper.dll
O2 - BHO: BrowserAddIn Class - {86D44A84-333C-4A3A-95E6-09E09E0A6192} - C:\Program Files\Little Grad\Savings Manager\LittleGradSM.dll
I'll put the rest in another postO4 - HKLM\..\Run: [nod32kui] "C:\Program Files\Eset\nod32kui.exe" /WAITSERVICE
O4 - HKLM\..\Run: [TkBellExe] "C:\Program Files\Common Files\Real\Update_OB\realsched.exe"  -osboot
O4 - HKCU\..\Run: [TivoTransfer] "C:\Program Files\Common Files\TiVo Shared\Transfer\TiVoTransfer.exe" /service /registry /auto:TivoTransfer
O4 - HKCU\..\Run: [TivoServer] "C:\Program Files\TiVo\Desktop\TiVoServer.exe" /service /registry /auto:TivoServer
O4 - HKCU\..\Run: [updateMgr] "C:\Program Files\Adobe\Acrobat 7.0\Reader\AdobeUpdateManager.exe" AcRdB7_0_9 -reboot 1
O4 - Startup: HotSync Manager.lnk = C:\Program Files\Sony Handheld\HOTSYNC.EXE
O4 - Global Startup: Adobe Reader Speed Launch.lnk = C:\Program Files\Adobe\Acrobat 7.0\Reader\reader_sl.exe
O9 - Extra button: (no name) - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.5.0_04\bin\npjpi150_04.dll
O9 - Extra 'Tools' menuitem: Sun Java Console - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.5.0_04\bin\npjpi150_04.dll
O9 - Extra button: Little Grad Savings Manager - {C9B98AAA-3E6E-4f33-BC89-7840D1F089FB} - C:\Program Files\Little Grad\Savings Manager\LittleGradSM.dll
O9 - Extra 'Tools' menuitem: Little Grad Savings Manager - {C9B98AAA-3E6E-4f33-BC89-7840D1F089FB} - C:\Program Files\Little Grad\Savings Manager\LittleGradSM.dll
O9 - Extra button: (no name) - {CD67F990-D8E9-11d2-98FE-00C0F0318AFE} - (no file)
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\MSMSGS.EXE
O9 - Extra 'Tools' menuitem: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\MSMSGS.EXE
O12 - Plugin for .aspx: C:\Program Files\Internet Explorer\PLUGINS\nppdf32.dll
O16 - DPF: {01A88BB1-1174-41EC-ACCB-963509EAE56B} (SysProWmi Class) - http://support.dell.com/systemprofiler/SysPro.CAB
O16 - DPF: {0E5F0222-96B9-11D3-8997-00104BD12D94} (PCPitstop Utility) - http://www.pcpitstop.com/pcpitstop/PCPitStop.CAB
O16 - DPF: {17492023-C23A-453E-A040-C7C580BBF700} (Windows Genuine Advantage Validation Tool) - http://go.microsoft.com/fwlink/?linkid=39204
O16 - DPF: {1E2941E3-8E63-11D4-9D5A-00902742D6E0} (iNotes Class) - https://mygmgw.gm.com/http://usabhma04.mail.gm.com/iNotes.cab
O16 - DPF: {3BFFE033-BF43-11D5-A271-00A024A51325} (iNotes6 Class) - https://mygmgw.gm.com/http://usabhma04.mail.gm.com/iNotes6W.cab
O16 - DPF: {3DC2E31C-371A-4BD3-9A27-CDF57CE604CF} (MSN Money Charting) - http://moneycentral.msn.com/cabs/pmupd806.exe
O16 - DPF: {6E32070A-766D-4EE6-879C-DC1FA91D2FC3} (MUWebControl Class) - http://update.microsoft.com/microsoftupdate/v6/V5Controls/en/x86/client/muweb_site.cab?1164836655859
O16 - DPF: {712D42CD-3513-473E-96E8-019C9AD78F1A} - http://moneycentral.msn.com/cabs/pmupdate2.exe
O16 - DPF: {7FE26BE2-B923-4B41-9834-E84DA1CC1F96} (Maid Control) - http://vsp.closetmaid.com/vsp/cmaidctl_vsp.closetmaid.com_downloader.cab
O16 - DPF: {8A0019EB-51FA-4AE5-A40B-C0496BBFC739} (Verizon WIRELESS Media UPLOAD) - http://www.vzwpix.com/activex/VerizonWirelessUploadControl.cab
O16 - DPF: {9732FB42-C321-11D1-836F-00A0C993F125} (mhLabel Class) - http://www.pcpitstop.com/mhLbl.cab
O20 - Winlogon Notify: igfxcui - C:\WINDOWS\SYSTEM32\igfxsrvc.dll
O20 - Winlogon Notify: WgaLogon - C:\WINDOWS\SYSTEM32\WgaLogon.dll
O23 - Service: Acronis Scheduler2 Service (AcrSch2Svc) - Acronis - C:\Program Files\Common Files\Acronis\Schedule2\schedul2.exe
O23 - Service: InstallDriver Table Manager (IDriverT) - Macrovision Corporation - C:\Program Files\Common Files\InstallShield\Driver\11\Intel 32\IDriverT.exe
O23 - Service: iPod Service - Apple Computer, Inc. - C:\Program Files\iPod\bin\iPodService.exe
O23 - Service: Norton AntiVirus Auto Protect Service (navapsvc) - Unknown owner - C:\Program Files\Norton SystemWorks\Norton Antivirus\navapsvc.exe (file missing)
O23 - Service: NOD32 Kernel Service (NOD32krn) - Eset  - C:\Program Files\Eset\nod32krn.exe
O23 - Service: Norton Unerase Protection (NProtectService) - Symantec Corporation - C:\PROGRA~1\NORTON~1\NORTON~1\NPROTECT.EXE
O23 - Service: Speed Disk service - Symantec Corporation - C:\PROGRA~1\NORTON~1\NORTON~1\SPEEDD~1\NOPDB.EXE
O23 - Service: Symantec Core LC - Symantec Corporation - C:\Program Files\Common Files\Symantec Shared\CCPD-LC\symlcsvc.exe
O23 - Service: SymWMI Service (SymWSC) - Symantec Corporation - C:\Program Files\Common Files\Symantec Shared\Security Center\SymWSC.exe
O23 - Service: TiVo Beacon (TivoBeacon2) - Unknown owner - C:\Program Files\Common Files\TiVo Shared\Beacon\TiVoBeacon.exe" /service (file missing)
O23 - Service: Ulead Burning Helper (UleadBurningHelper) - Ulead Systems, Inc. - C:\Program Files\Common Files\Ulead Systems\DVD\ULCDRSvr.exe