Yes reformating will erase all the files so... do you have a cd burner? or dvd burner? If yes, back up all your important stuff. You must have some type of backup devices, surely!

A reformat might be the way to go. If you want to get your system properly checked out, go to Norbie's site & ask him for advice. As well as being a master of getting rid of viruses from people's systems & getting them back into top shape, he also gives general advice about such things. So register at his site ... tell him I sent you if you like & do as he requests. He'll probably ask you to run a special program & post the results. Explain as much detail to him as possible about your past & present experience; See NorbiesWorld (click on link)