Unknown GIF Malware???

I recently came across a suspicious file, which Windows XP was able to identify as corrupt or unreadable.
I have no idea how this file slipped into my system. HijackThis was not able to detect it, since it only scans for active processes.
Windows told me to run Chkdsk, so I did.
But it seems that Chkdsk could not repair the error.

This is where the GIF file is located:

C:\Documents and Settings\Jon2\Local Settings\Temporary Internet Files\Content.IE5\8CS83MB9\bg_131x21[1].gif 1.75KB

Then, I deleted the file. The Recycle Bin icon shows the file is there, but when I open it, the GIF file is missing. So I tried emptying the Recycle Bin.
A pop-up window says, "Are you sure you want to delete 'WINDOWS'?"

I tried restoring the file so that I could shred it with a file shredder, but alas it won't restore to the directory anymore.
Is there anyway to delete/remove the malware out of my system for good, without the need for reformatting??

BTW, it seems that it also corrupted an important file/folder in Firefox. Everytime I open it, it seems that I'm using it for the first time.
The homepage reverts back to the default Firefox homepage no matter how many times you try to change it, and the tabs for newly installed extensions re-appear. This is getting very annoying and frustrating

I also tried scanning the entire system with Antivir, NOD32 (on-demand), SAS Free and a-Squared

 

Did you try Revo uninstaller? http://www.revouninstaller.com/ It is suppose to get rid of stuff that refuses to delete or uninstall. There is a drag and drop option too.

 

I checked the same location on my computer, I only have a cookie of Wilders there.

 

I've already fixed my system using ComboFix.
I wished you guys would reply a little more earlier when I actually needed some help