Win XP-ME - How to disable
System RestoreFiles that are found in system folders if infected and deleted without previously having disabling system restore are saved into the c:\System Volume Information folder _restore point/s, unfortunately because of windows protection of that area the only way to deal with an infected restore point is to disable system restore, losing ALL restore points.
This is unfortunately a fact of life and many virus removal procedures clearly mention disabling system restore prior to deleting/moving files from the system folders. If you don't do this, in the future if you use the system restore function you could well be restoring the prior infected file/s.
When you re-enable system restore (after confirming you are clear) you will be creating a restore point of a clean system at that point in time, this will be as far back as you can go. System Restore is far from a perfect tool and not something I rely on, mine is permanently disabled, however, to do this you need your own means of recovering from problems.
I do a weekly image (exact copy) of my partitions and save them to a second hard disk and I do daily back-ups of my data files (things that are likely to change, .doc, .xls, emails, address book, bookmarks, etc. This way I have a tried and tested means of recovery.