Thanks for the reply.
I ran mbam and the log is below
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Malwarebytes' Anti-Malware 1.50.1.1100
www.malwarebytes.orgDatabase version: 5592
Windows 5.1.2600 Service Pack 3, v.5973
Internet Explorer 7.0.5730.13
25/01/2011 12:18:24 PM
mbam-log-2011-01-25 (12-18-24).txt
Scan type: Quick scan
Objects scanned: 151019
Time elapsed: 4 minute(s), 33 second(s)
Memory Processes Infected: 0
Memory Modules Infected: 0
Registry Keys Infected: 0
Registry Values Infected: 2
Registry Data Items Infected: 0
Folders Infected: 0
Files Infected: 2
Memory Processes Infected:
(No malicious items detected)
Memory Modules Infected:
(No malicious items detected)
Registry Keys Infected:
(No malicious items detected)
Registry Values Infected:
HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Internet Settings\ProxyServer (PUM.Bad.Proxy) -> Value: ProxyServer -> Quarantined and deleted successfully.
HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Run\jdqlicwk (Trojan.FakeAlert.Gen) -> Value: jdqlicwk -> Quarantined and deleted successfully.
Registry Data Items Infected:
(No malicious items detected)
Folders Infected:
(No malicious items detected)
Files Infected:
c:\documents and settings\don hardie\local settings\temp\0.3752704622822739.exe (Trojan.Downloader) -> Quarantined and deleted successfully.
c:\documents and settings\don hardie\local settings\temp\eheatthia\trz7.tmp (Trojan.Downloader) -> Quarantined and deleted successfully.
--------------------------------
I then ran OTL and it ran for over an hour stuck on HKEY_LOCAL_MACHINE Run Keys and then showed Not Responding, I tried twice more with the same result.