Computer problem...Help..please

Had a bit of a virus/spyware problem over the last couple of days.

My AVG antivirus software picked up a virus yesterday which I deleted. Thought no more of it until I logged on today and It picked up another virus. Then loads of pop ups appeared along with a new icon on my desk top and one on my tool bar.

I got rid of the pop ups but I was left with this in my tool bar and try as I might I cannot get rid of it.

The system intrusion detected which shows up as 'virus allert' current items is the problem. It continually flips between the red circle with white diagonal cross and the windows update icon (a cunning use of a familar safe icon!!) When I clicked on the message it brought up a web page which offered lots of anti spyware software all of which had a free scan funtion which download software onto the pc. The free scan picked up loads of stuff very quickly (in fact it was the quickest scan i've ever seen). However in order to remove the so called problems the site requires you to buy the full product on line, in fact even hitting the help button takes you to the buy online page. I'm guessing that this is a scam to either relive you of the 50$ (can't even get the dollar sign in the right place) for the product or simply get you card details. Now after my mate did lots of deleting he has stopped the system intrusion detected message opening this web page when it is clicked. He also managed to get rid of a page that came up when I opened internet explorer. Said page informed me that my pc was undere the contol of another pc and my personal documents were being looked at. It listed my i.p address and other info about my pc and had more links to sites where I could buy software to fix my problem. This page however was not online since it came up when my internet connection was disconnected.

Oh and pop ups have started appearing, from gambling sites and adult friend finder!! WTF

After updating my spybot software, installing zone alarm and adaware se personal things have got a lot better but i can still not remove this virus allert from my tool bar. I can set it to always hide which stops the anoying message popping up but it is still there and I am worried there may also be other files on the pc not being detected. Virus allert doesn't show up when you do a 'ctrl alt del' and if you right click on it nothing happens (btw microsoft antispyware and windows firewall have both been useless, the pair of them being comprehensively bipassed by the virus/spyware )

Sorry for the long waffle but I would really appreciate some advice on this one. Has anyone had this before?

Oh two more things, it doesn't appear on other accounts on the pc just mine although it still shows up in safe mode and my mate tried doing a system restore from before the problems started but it fails (a symptom of the problem?)