Me thinks a good formatting of the hard drive and fresh installation of windows would solve your problem, at least for a little while.
What spyware protection are you using? What firewall?
You don't know whether you have SP2 for Win XP installed? Right click on My Computer and select Properties. What do you see on the General tab?
All Windows computers come with IE. With Win XP, you either have IE 6 or IE 7. What do you have?