BooBabe, you can find instructions on how to use System Restore in our tutorial:Windows XP System Restore Guide.Managing Windows Millenium System Restore
If you disable System Restore and then re-enble it, that will delete all your restore points which are stored in the systemvolumeinformation folder. This will remove what AVG is warning you about. But nothing in your restore points is actively affecting or infecting your PC. Anything in systemvolumeinformation is locked down and won't affect you unless you use System Restore to go back to an earlier time. So your crashes are not related to what is in the systemvolumeinformation folder. Most likely you are infected with a virus/trojan or even more likely one of the new very nasty hijackers/parasites.
Harry has given you some good advice on how to check for and clean viruses. If you submit a HijackThis log for us to look at we can get a good idea of what is going on and how to correct it.
I strongly recommend that you read the following and do what is suggested:How to use this Forum
There is a link to HijackThis in the page linked to above . Once you have HijackThis in it's own folder, open HijackThis.exe and click Scan. The Scan button will turn into a Save Log button. Click that, save the log somewhere convenient like My Documents, then copy and paste the entire contents of the log into your next reply to this thread.