Sorry to be gone so much now....I work for myself, and sometimes have more time, sometimes have none. But I always turn up again sooner or later.
Anyhow, you did NOT need to install SP3 for IE8. I just got done installing IE8 on a computer that we didn't want SP3 on. It can be done. There's an update I had to install manually, the KB# of which escapes me right now, but I unchecked the box that says to install updates and it sent me right to the download page for it. It can be done, and it wasn't hard. Sorry you got SP3 over that.....oops......
Backups are interesting....image backups have their place, but everyday use is not it, in my opinion. Image backups are good for system-state storage, but incremental file backups are much more efficient for protecting your "stuff." I use Cobian Backup 9 for that. It's tops, and it's free.
If you're having trouble with your external hard drive, try it in Puppy to see if there's a problem with the hard drive or with Windows. The fact that it said that something was accessing it when you attempted safe removal proves very little indeed. It was stuck and probably just assumed that was the reason. Don't give Windows credit for being too bright......
Cannot reconnect all network drives could be due to network settings changing. Try disconnecting them and reconnecting them and see if they stick. If you didn't think you had any......the virus tried to map a drive in Nairobi
........... You should see any mapped drives at the very bottom of the list in My Computer. Delete them and re-map them.
When you uninstall and reinstall FireFox, you may need to tell it to clear all settings on the way out so that the new installation doesn't inherit problems from the old. FF3 is glitchy, and always has been, but 3.5 seems fine. I used FF2 and Opera until FF3.5 came out.
Glad things are working better. Oh, and Eusing is safe enough to run regularly, but I'd recommend creating System Restore points before you do, just in case it nukes a key you find you need back. It's only happened once or twice in my entire time of doing business. In spite of the amount of stuff it finds, it's actually fairly conservative in its approach. It's just more thorough than many.