Here's what I would do:
1. Remove the hard drive from the computer.
2. Put the hard drive in a another computer (as a slave drive) or buy a USB external hard drive adapter to put the drive in and connect it to another computer.
3. Backup all of your personal files to the hard drive on the other computer (they should be virus-free - viruses usually only attack operating system files).
4. Put the hard drive back into the computer.
5. Run your recovery disk on the computer and restore it to its factory state.
6. Load your music files back onto the computer via a network cable or an external hard disk.
The worst thing you could do is panic and reformat the infected hard drive. I wouldn't do anything until you get your personal files backed up off of it.
Computers that are infected with trojan viruses (which sounds like what you are dealing with) will usually never be the same, even if you think you have removed the virus. You should always reformat your hard drive and reinstall your operating system after a trojan infection (once you have backed up your files).
You may also want to run a virus check after you restore your personal files, just to make sure you didn't backup anything that was affected by the virus.
I personally do not run a virus program in the background because it eats up too many resources and makes your computer run slower. If you're careful, you usually won't run into viruses. I just stay away from questionable sites, and I run Spyware Doctor once a month on all my PC's.
P.S. - If you use Google as your search engine it will sometimes warn you before allowing you to enter a site that has suspected malware.
