I have spent hours trying different spyware programs, virus removals, system restores, system re-installs, manual msconfig modifications, regedit, you name it, I had tried it.

I'm using XP pro and my IE works fine, but the Windows Explorer which is obviously built using IE, would not work. I could not get into My Computer, Control Panel, Network Places, Nothing...

It was as simple as DancingWithElves solution. Disable 3rd party... in IE.

All spyware authors should rot in hell!!!!!!!!