problem with spyare and virus need a patch or help

I have been given a Toshiba laptop to sort out by a mate it has vista OS but it has a spy ware or virus which he has asked me to try and get rid of.

The pictures on the desktop have been replaced by a blue background and red AND white text which reads the following:

WARNING!
YOUR'RE IN DANGER!
YOUR COMPUTER IS INFECTED WITH SPYWARE!

ALL YOU DO WITH COMPUTER IS STORED FOREVER IN YOUR HARD DISK. WHEN YOU VISIT SITES, SEND EMAILS... ALL YOUR ACTIONS ARE LOGGED AND IT IS IMPOSSIBLE TO REMOVE THEM WITH STANDARD TOOLS. YOUR DATA STILL AVAILABLE FOR FORENSICS. AND IN SOME CASES

FOR YOUR BOSS, YOUR FRIENDS, YOUR WIFE, YOUR CHILDREN.

Every site you or somebody or even something, like spyware, opened in your browsers, with all the images, and all the downloaded and maybe later removed movies or mp3 songs - ARE STILL THERE and could break your life!

SECURE YOURSELF RIGHT NOW! REMOVE ALL SPYWARE FROM YOUR PC!

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the pc has also run a system tool and apparently found 38 infections

HELP NEEDED PLEASE?

Hello,

Please follow the instructions in ==>This Guide<==. If you cannot complete a step, skip it and continue.

Once the proper logs are created, then make a NEW TOPIC and post it ==>HERE<== Please include 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.

Orange Blossom