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I am about to use my system recovery CD, which I believe will reformat my hard drive. If I do have viruses/spyware on my computer, will reformatting my hard drive totally remove them? Is there anywhere left for them to hide? Thanks!!
Reformatting should remove viruses completely.
If you have something called a restore partition on your drive, there's a chance the files in there could be infected if the restore CDs don't recreate that partition. If you wipe the entire drive from the CD though, you should be fine.
Most likely it's a diagnostic partition set up by the manufacturer, I see it a lot on Dell systems. Generally you don't have to worry about it, but if you like you can remove it if you're using an XP setup disk at the initial partition setup screen, or later in Windows from the Disk Management control panel.