XP Home infected with Patched.fm

My issue
Hello, I am making a computer repair to a small, Acer laptop that uses Windows XP Home version 2002, SP3. After installing the malware software (MalwareBytes Anti-Malware) and antivirus software (AVG Free 2011), AVG noticed that a file was infected, and it continues to pop up over and over with no way to clear it. The file in question is

C:\WINDOWS\system32\winlogon.exe

The threat name is

Win32/Patched.FM

What I've done
I have run an otherwise full virus scan, Malware scan, and attempted system restores. I have also recently downloaded ComboFix as I was researching, but decided that, while reading about it, to post the results of the scan where appropriate. I have not yet run the scan via ComboFix.

I have disabled my antivirus
I have closed all windows and browsers
I have no malware scanners running

Included in this help request
AVG scan log

Scan "Whole computer scan" completed.
Infections;"5";"2";"3"
Warnings;"3";"3";"0"
Folders selected for scanning:;"Whole computer scan"
Scan started:;"Monday, November 08, 2010, 1:22:09 PM"
Scan finished:;"Monday, November 08, 2010, 1:59:58 PM (37 minute(s) 48 second(s))"
Total object scanned:;"500470"
User who launched the scan:;"Rita Williams"

Infections
;"File";"Infection";"Result"
;"C:\WINDOWS\system32\winlogon.exe (724)";"Virus identified Win32/Patched.FM";""
;"C:\WINDOWS\system32\winlogon.exe";"Virus identified Win32/Patched.FM";"Object is white-listed (critical/system file that should not be removed)"
;"C:\WINDOWS\system32\winlogon.exe";"Virus identified Win32/Patched.FM";"Object is white-listed (critical/system file that should not be removed)"
;"C:\System Volume Information\_restore{D24A3BE8-4CBB-48D0-81AD-ACAFA6A6C48B}\RP336\A0036122.exe";"Virus identified Win32/Patched.FM";"Moved to Virus Vault"
;"C:\System Volume Information\_restore{D24A3BE8-4CBB-48D0-81AD-ACAFA6A6C48B}\RP330\A0035211.dll";"Trojan horse Generic2_c.BDWK";"Moved to Virus Vault"

Warnings
;"File";"Infection";"Result"
;"C:\Documents and Settings\Rita Williams\Local Settings\Temp\000003D6";"Corrupted executable file";"Moved to Virus Vault"
;"C:\Documents and Settings\Rita Williams\Local Settings\Temporary Internet Files\Content.IE5\1I0B2JC4\iTunesSetup[1].exe";"Corrupted executable file";"Deleted"
;"C:\Documents and Settings\Rita Williams\Local Settings\Application Data\Google\Chrome\User Data\Default\Cache\f_000012";"Corrupted executable file";"Moved to Virus Vault"

Please follow the instructions in ==>This Guide<==.

Once the proper logs are created, then make a NEW TOPIC and post it ==>HERE<== Please include the link to this topic in your new topic and a description of your computer issues and what you have done to resolve them.

If you can produce at least some of the logs, then please create the new topic and explain what happens when you try to create the log(s) that you couldn't get. If you cannot produce any of the logs, then still post the topic and explain that you followed the Prep. Guide, were unable to create the logs, and describe what happens when you try to create the logs.

Once you have created the new topic, please reply back here with a link to the new topic.

Thank you. Sorry about doing so incorrectly the first time.

The link to the logs and such is here.

The logs came just fine, it seems.

Reference: http://www.bleepingcomputer.com/forums/topic359342.html

Now that your log is properly posted, you should NOT make further changes to your computer (install/uninstall programs, use special fix tools, delete files, edit the registry, etc) unless advised by a Malware Removal Team member, nor should you continue to ask for help elsewhere. Doing so can result in system changes which may not show it the logs you already posted. Further, any modifications you make on your own may cause confusion for the helper assisting you and could complicate the malware removal process which would extend the time it takes to clean your computer.

From this point on the Malware Removal Team should be the only members that you take advice from, until they have verified your log as clean.

Please be patient. It may take a while to get a response because the Malware Removal Team members are very busy working logs posted before yours. They are volunteers who will help you out as soon as possible. Once you have made your post and are waiting, please DO NOT make another reply until it has been responded to by a member of the Malware Removal Team. Generally the staff checks the forum for postings that have 0 replies as this makes it easier for them to identify those who have not been helped. If you post another response there will be 1 reply. A team member, looking for a new log to work may assume another Malware Removal Team member is already assisting you and not open the thread to respond.

To avoid confusion, I am closing this topic...good luck.

Louis