Help! My computer is telling me I have a spyware and trojan

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Hana:
I started getting this message after downloading and installing an active video something, I know very little about computers, after gettin the messages, I assumed it was the active video thing that's causing this, so I uninstalled it, and rebooted, and now I'm still getting the message, and my internet explorer has a new homepage, and is prompting me to download and install a spyware program. Right now I'm scanning my computer using bitdefender. Should I download the spyware program, that the internet explorere prompted me to? Please help!  :'(

I tried attaching the picture of the internet explorer and the notification on trojan that I got, but JPEG etc are not accepted.

I don't know how to get the picture to appear in the message.

Hana:
This is the message that popped up on my screen, among the various alerts...

Critical System Warning!
Your system is probably infected with latest version of Spyware.CyberLog-X.
Type: Spyware
Risk: High
System Affected: Windows 95,98,2000,NT,2003 Server, Windows XP
Behavior: Spyware.CyberLog-X is a spyware program that monitors user activity, logs keystrokes, and tracks Web sites visited.
Symptoms: Low Internet connection speed
Low system performance
Security center alerts
Strange pop up windows
Protection: Click Ok to download antispyware software.

I'm using XP.

A new icon just appeared at the rlower right hand corner of the screen with the message:

System Alert: Malware threats
your computer is infected with a back door Trojan that allows the remote attacker to perform various malicious actions. Click this baloon to download malware removal software.

Should I? Aside from the one the internet explorer is telling me?

Hana:
Another alert:

Windows Internet Explorer
Warning!
W32.Myzor.FK@f is a virus that infects files with .exe extensions. It attempts to steal passwords and private information from the infected computer.

Type; Virus
Infection Length: 138,293 bytes
System Affected: Windows 95,98,ME,NT (all versions), 2003, Windows XP (all service packs)
System Not Affected: DOS, EPOC,Linux,Macintosh, Novell Netware, OS/2, UNIX
Technical details: 1. Creates files in %Windir%\ directory. By default, this is C:\Windows.
2. Adds values to registry keys: HKEY_LOCAL_MINACHINE\Software\Microsoft|Wondows|CurrentVersion\Run
3. Scans the hard drive for .exe files and infects any executable files. Searches for passwords/information, which it may send to a remote attacker.
Recomendations: Click "OK" to download officially approved security software. Always keep your patch levels up-to-date.

Should I adhere to this one?

Andygal:
Go Here and download Ad-Aware SE Personal.

Weaver:
The start page, lower icon, alerts and messages are all fake attempts to infect your computer further.
It's the Smitfraud malware. There is a removal guide available here including a tool. It requires booting your computer into Safe Mode.

Other software that can remove the infection are: ewido, PrevX, Spybot (possibly) and most Anti-Virus packages (AVG/Avast).
You can secure your computer with programs like SpywareBlaster or switching to alternate internet browsers (Firefox/Opera).

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