Second Option: Back up and then reinstall?

Are you using a pirated version of XP? Or an unupdated version of the origional XP? (no sp1)

Hit ctrl alt delete and look at your processes running, and google em - sometimes you can catch malware that way... if you feel lucky.
Otherwise try downloading HijackThis (one word, google it) and run it, then post the results it gives ya.

Bipper