You were close to nailing it here after the MBAM run and you should have deleted the infected files, but that is all by the by now.
After deleting the MBAM detections, you would turn off your computer to finalize things.
http://forum.avast.com/index.php?topic=46120.msg387672#msg387672Leaving the infections undeleted and then running the avast scan immediately after would have aggravated things. Likewise after striking lucky with MBAM, then a boot-time scan would have been a good thing to do at restart. I hadn't expected MBAM to dig out that much.
Also, all scans with the Graphic User Interface are slow, especially when a computer is infected. If you had deleted the MBAM detections and restarted the computer, I'm sure that a scan in Safe Mode would have run a lot smoother. But that is something to remember for next time. I had to run these things through so many times when I first started malware detection that I now do it by rote (practice). Which is much easier than having to write it out like this. So may help to let your computer sit for a while, then run it through again. If no good then look to recovery disk as micky77 says.
Your not helping things much either by running outdated Windows. Service pack 3 has been out for a year now and is markedly more secure than SP2. You need to keep up with Microsoft updates if you are running a Windows system. Also check your Java. These are equally serious issues as your virus detection.
Sun Java is down level and has security exposures.
Go to Add/Remove Programs and uninstall all Sun Java installs.
Install the latest Sun Java:
http://www.java.com/en/download/manual.jsp
Edit - btw good move to send infected files to avast. I took me a long time before I had the good sense to do that.