This showed up on the family XP box today, with all MS security updates applied, along with free versions of ZoneAlarm and AVG running. If you need a culprit, it might be the young neighbor who installed some video-burning software, but I'm looking past that. Right now I've got a system where google searches are hijacked, IE is launched every few minutes, I can't launch regedit without restarting in safe mode, and in short the machine seems greatly compromised.
When I did launch in safe mode none of the expected entries showed up in the registry, nor in the main user's My Documents\New Folder folder. Before the reboot there were two separate setup.exe processes running -- that's going to be a treat to track down.
I'm considering backing up all the photos, kids work, email, etc and doing a full reinstall. Anyone have an alternative?