You asked, I copy/paste...
You are seeing the effects of a hijackware infection. See...
Cleaning a Compromised System
http://technet.microsoft.com/en-us/library/cc700813.aspx
Back-up any personal data (none of which should be considered 100% trustworthy at this point) then format the HDD & do a clean install of Windows. Please note that a Repair Install (AKA in-place upgrade) will NOT fix this!
HOW TO do a clean install of Win7: See the "Using the Custom installation option and formatting the hard disk" (or the "Reinstalling Windows 7") section of http://windows.microsoft.com/en-us/windows7/Installing-and-reinstalling-Windows-7
NOTE: If your computer didn't come with a set of disks, there will be a hidden Recovery partition (not to be confused with System Restore) you would use to do the clean install (AKA a "destructive recovery").
After the clean install, you will have the equivalent of a "new computer" so take care of EVERYTHING on the following page BEFORE otherwise connecting the machine to the internet or a local network (i.e., other computers) AND BEFORE connecting a flash drive, SDCard, or any other external drive to the computer:
4 steps to help protect your new computer before you go online
http://www.microsoft.com/security/pypc.aspx
VERY IMPORTANT!! => Any Norton or McAfee free-trial that came preinstalled on the computer when you bought it will be reinstalled (but invalid) when Windows is reinstalled. You MUST uninstall the free-trial AND download/run the appropriate removal tool BEFORE installing any updates AND BEFORE installing your new anti-virus application (e.g., Microsoft Security Essentials - free).
Norton Removal Tool
ftp://ftp.symantec.com/public/english_us_canada/removal_tools/Norton_Removal_Tool.exe
McAfee Consumer Products Removal Tool
http://download.mcafee.com/products/licensed/cust_support_patches/MCPR.exe
Also see:
Risks & Benefits of P2P file sharing
• http://www.microsoft.com/protect/data/downloadfileshare/filesharing.aspx
• http://blogs.technet.com/mmpc/archive/2008/10/06/the-cost-of-free-software.aspx
• http://www.us-cert.gov/cas/tips/ST05-007.html
Steps To Help Prevent Spyware
http://www.microsoft.com/security/spyware/prevent.aspx
Steps to Help Prevent Computer Worms
http://www.microsoft.com/security/worms/prevent.aspx
Avoid Rogue Security Software!
http://www.microsoft.com/security/antivirus/rogue.aspx
If you need additional assistance with the clean install, please begin a new thread in this forum: http://social.answers.microsoft.com/Forums/en-US/w7repair/threads
If these procedures look too complex - and there is no shame in admitting this isn't your cup of tea - take the machine to a local, reputable and independent (i.e., not BigBoxStoreUSA or Geek Squad) computer repair shop.
~Robear Dyer (PA Bear) ~ MS MVP (IE, Mail, Security, Windows & Update Services) since 2002 ~ Disclaimer: MS MVPs neither represent nor work for Microsoft