Windows attempts to protect files that are deleted from the system folders (just in case it was an accident), so they can be restored if required. The problem is many malware writers are wise to that and put their files in the system folders, this is also done to confuse you into thinking you could be deleting an important system file.
Disable system restore, reboot, scan and if clean enable system restore again.
Start > Control Panel > System > System restore > Disable
Click Apply
Enable it again
Click Ok
I can't imagine why the infected file was not detected...