Oh yes, I am 100% sure that it is NOT a keyboard/mouse problem. I mean, which "problem" comes into existence such randomly? If a hardware is faulty, it would show consistent malfunctioning properties, not so here..anyways.
After scanning with Kaspersky and also with Spybot (and removing any threats the former displayed), I was almost happy that everything has become normal...until today! admittedly, my PC runtime is quite high today so I am guessing the malware remians dormant inintially. Right now, I am unable to move and drag any icons on desktop and explorer (which I was doing fine just 5 minutes back). So I am infected again as I type this. I am also attaching Hijackthis log. I did the scan only 2 minutes back after the infection...I hope a good soul would provide me a solution...this is eating my heart!
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Logfile of HijackThis v1.99.1
Scan saved at 11:57:39 PM, on 30-Jul-08
Platform: Windows XP SP3 (WinNT 5.01.2600)
MSIE: Internet Explorer v7.00 (7.00.6000.16674)
Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\WINDOWS\Explorer.EXE
C:\WINDOWS\system32\RUNDLL32.EXE
C:\WINDOWS\system32\taskswitch.exe
C:\WINDOWS\system32\fast.exe
C:\WINDOWS\RTHDCPL.EXE
C:\Program Files\COMODO\Firewall\cfp.exe
C:\PROGRA~1\ALWILS~1\Avast4\ashDisp.exe
C:\Program Files\DAEMON Tools Pro\DTProAgent.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Free Download Manager\fdm.exe
C:\Program Files\Google\GoogleToolbarNotifier\GoogleToolbarNotifier.exe
F:\GAMEWARES\FRAPS\FRAPS.EXE
C:\WINDOWS\system32\devldr32.exe
G:\Software\03_Tools\tclocklight-040702-3\tclock.exe
C:\Program Files\Texter\texter.exe
C:\Program Files\WordWeb\wweb32.exe
C:\Program Files\Alwil Software\Avast4\aswUpdSv.exe
C:\Program Files\Alwil Software\Avast4\ashServ.exe
C:\Program Files\Bonjour\mDNSResponder.exe
C:\Program Files\COMODO\Firewall\cmdagent.exe
C:\Program Files\Common Files\Microsoft Shared\VS7DEBUG\MDM.EXE
C:\WINDOWS\system32\nvsvc32.exe
C:\WINDOWS\system32\Fast.exe
C:\Program Files\Alwil Software\Avast4\ashWebSv.exe
C:\WINDOWS\system32\wscntfy.exe
C:\Program Files\HijackThis\analyse.exe
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = *go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = *go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Search Page = *go.microsoft.com/fwlink/?LinkId=54896
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = *go.microsoft.com/fwlink/?LinkId=69157
R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Internet Settings,ProxyOverride = *.local
O2 - BHO: Spybot-S&D IE Protection - {53707962-6F74-2D53-2644-206D7942484F} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O2 - BHO: SSVHelper Class - {761497BB-D6F0-462C-B6EB-D4DAF1D92D43} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O2 - BHO: Google Toolbar Helper - {AA58ED58-01DD-4d91-8333-CF10577473F7} - c:\program files\google\googletoolbar1.dll
O2 - BHO: Google Toolbar Notifier BHO - {AF69DE43-7D58-4638-B6FA-CE66B5AD205D} - C:\Program Files\Google\GoogleToolbarNotifier\3.0.914.9778\swg.dll
O2 - BHO: FDMIECookiesBHO Class - {CC59E0F9-7E43-44FA-9FAA-8377850BF205} - C:\Program Files\Free Download Manager\iefdm2.dll
O3 - Toolbar: &Google - {2318C2B1-4965-11d4-9B18-009027A5CD4F} - c:\program files\google\googletoolbar1.dll
O4 - HKLM\..\Run: [NvCplDaemon] RUNDLL32.EXE C:\WINDOWS\system32\NvCpl.dll,NvStartup
O4 - HKLM\..\Run: [nwiz] nwiz.exe /install
O4 - HKLM\..\Run: [NvMediaCenter] RUNDLL32.EXE C:\WINDOWS\system32\NvMcTray.dll,NvTaskbarInit
O4 - HKLM\..\Run: [CoolSwitch] C:\WINDOWS\system32\taskswitch.exe
O4 - HKLM\..\Run: [FastUser] C:\WINDOWS\system32\fast.exe
O4 - HKLM\..\Run: [amd_dc_opt] C:\Program Files\AMD\Dual-Core Optimizer\amd_dc_opt.exe
O4 - HKLM\..\Run: [RTHDCPL] RTHDCPL.EXE
O4 - HKLM\..\Run: [Alcmtr] ALCMTR.EXE
O4 - HKLM\..\Run: [COMODO Firewall Pro] "C:\Program Files\COMODO\Firewall\cfp.exe" -h
O4 - HKLM\..\Run: [avast!] C:\PROGRA~1\ALWILS~1\Avast4\ashDisp.exe
O4 - HKCU\..\Run: [DAEMON Tools Pro Agent] "C:\Program Files\DAEMON Tools Pro\DTProAgent.exe"
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [Free Download Manager] "C:\Program Files\Free Download Manager\fdm.exe" -autorun
O4 - HKCU\..\Run: [swg] C:\Program Files\Google\GoogleToolbarNotifier\GoogleToolbarNotifier.exe
O4 - HKCU\..\Run: [Fraps] F:\GAMEWARES\FRAPS\FRAPS.EXE
O4 - Startup: tclock.lnk = G:\Software\03_Tools\tclocklight-040702-3\tclock.exe
O4 - Startup: texter.lnk = C:\Program Files\Texter\texter.exe
O4 - Startup: WordWeb Pro.lnk = C:\Program Files\WordWeb\wweb32.exe
O8 - Extra context menu item: Download all with Free Download Manager - file://C:\Program Files\Free Download Manager\dlall.htm
O8 - Extra context menu item: Download selected with Free Download Manager - file://C:\Program Files\Free Download Manager\dlselected.htm
O8 - Extra context menu item: Download video with Free Download Manager - file://C:\Program Files\Free Download Manager\dlfvideo.htm
O8 - Extra context menu item: Download with Free Download Manager - file://C:\Program Files\Free Download Manager\dllink.htm
O8 - Extra context menu item: E&xport to Microsoft Excel - res://C:\PROGRA~1\MICROS~3\OFFICE11\EXCEL.EXE/3000
O9 - Extra button: (no name) - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O9 - Extra 'Tools' menuitem: Sun Java Console - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.6.0_07\bin\ssv.dll
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - C:\PROGRA~1\MICROS~3\OFFICE11\REFIEBAR.DLL
O9 - Extra button: (no name) - {DFB852A3-47F8-48C4-A200-58CAB36FD2A2} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O9 - Extra 'Tools' menuitem: Spybot - Search & Destroy Configuration - {DFB852A3-47F8-48C4-A200-58CAB36FD2A2} - C:\PROGRA~1\SPYBOT~1\SDHelper.dll
O9 - Extra button: (no name) - {e2e2dd38-d088-4134-82b7-f2ba38496583} - %windir%\Network Diagnostic\xpnetdiag.exe (file missing)
O9 - Extra 'Tools' menuitem: @xpsp3res.dll,-20001 - {e2e2dd38-d088-4134-82b7-f2ba38496583} - %windir%\Network Diagnostic\xpnetdiag.exe (file missing)
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O10 - Unknown file in Winsock LSP: c:\program files\bonjour\mdnsnsp.dll
O11 - Options group: [INTERNATIONAL] International*
O17 - HKLM\System\CCS\Services\Tcpip\..\{561EFACA-2E2F-414B-AA5D-A2967980D3BD}: NameServer = 208.67.222.222,208.67.220.220
O20 - AppInit_DLLs:
O20 - Winlogon Notify: dimsntfy - %SystemRoot%\System32\dimsntfy.dll (file missing)
O21 - SSODL: WPDShServiceObj - {AAA288BA-9A4C-45B0-95D7-94D524869DB5} - C:\WINDOWS\system32\WPDShServiceObj.dll
O23 - Service: Adobe LM Service - Adobe Systems - C:\Program Files\Common Files\Adobe Systems Shared\Service\Adobelmsvc.exe
O23 - Service: avast! iAVS4 Control Service (aswUpdSv) - ALWIL Software - C:\Program Files\Alwil Software\Avast4\aswUpdSv.exe
O23 - Service: avast! Antivirus - ALWIL Software - C:\Program Files\Alwil Software\Avast4\ashServ.exe
O23 - Service: avast! Web Scanner - Unknown owner - C:\Program Files\Alwil Software\Avast4\ashWebSv.exe" /service (file missing)
O23 - Service: ##Id_String1.6844F930_1628_4223_B5CC_5BB94B879762## (Bonjour Service) - Apple Computer, Inc. - C:\Program Files\Bonjour\mDNSResponder.exe
O23 - Service: COMODO Firewall Pro Helper Service (cmdAgent) - Unknown owner - C:\Program Files\COMODO\Firewall\cmdagent.exe
O23 - Service: FLEXnet Licensing Service - Macrovision Europe Ltd. - C:\Program Files\Common Files\Macrovision Shared\FLEXnet Publisher\FNPLicensingService.exe
O23 - Service: Google Updater Service (gusvc) - Google - C:\Program Files\Google\Common\Google Updater\GoogleUpdaterService.exe
O23 - Service: NMIndexingService - Nero AG - C:\Program Files\Common Files\Nero\Lib\NMIndexingService.exe
O23 - Service: NVIDIA Display Driver Service (NVSvc) - NVIDIA Corporation - C:\WINDOWS\system32\nvsvc32.exe
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I installed Avast! after cleaning the system with Kaspersky, as the later was giving me irritating prompts for buying the full version...