To protect your PC from viruses, spyware, rootkits etc it is essential to have some form of antivirus protection installed, and to have a firewall enabled (for alot of people windows firewall will suffice.)
It is not essential to pay for this protection as there are many free alternatives available (which are v.good)
Avast Free Antivirus
Avira Free Antivirus
Choosing from one of these two above (or choosing AVG or Microsoft Security Essentials as recommended in other answers) should protect you against all forms of malware inc. spyware.
Additional protection should be sought from an on demand scanner. One of the best in this regard is Malwarebytes AntiMalware Free Edition
They have recently introduced an Antirootkit Tool to complement this scanner.
Choosing either Avast or Avira (or AVG,MSE mentioned in other answers) together with both products from Malwarebytes along with turning your Windows Firewall on will protect you optimally for free.
If you wish to configure your Windows Firewall further, this article entitled "How to Create Advanced Firewall Rules in the Windows Firewall" in How-To Geek will give you further info. (although this is not essential)
Finally how you browse the internet and the sites you visit are up to you.