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I have seeked advice on another forum and they said to apply a new desktop wallpaper of "None", which worked! But now the problem is back - even though I have not altered anything to do with the desktop at all.
On boot up it also has a message asking if I want to allow ActiveX content to run. This has "Internet Explorer" as the title in the taskbar. Over time, if I leave this as it is, another identical window pops up, then later, another.
What is going on? I have searched for a virus but cannot find one.
By chance, I saw another computer screen running in a shop, which had the same Active Desktop Recovery message on the desktop. Perhaps this is a common problem caused by recent updates?
I am on Windows XP with all the latest patches.
How should I check for spyware?
You may want to run a few other packages to check for spyware. Defender is good, but it's best to use a few different ones. Spybot - Search & Destroy and Ad-Aware are a couple of free ones that come to mind. Also try running HijackThis to see if it finds anything.There are other spyware checking programs out there. Some free, some not. YMMV.
To locate the list of local user profiles, right-click My Computer, click Properties, and then click Settings on the Advanced tab under User Profile.
A corrupt user profile could indeed be the problem. If you can create a new user profile and the problem goes away then you might want to try to migrate your settings to the new profile from the damaged one. MS has an article about how to do this: How to copy data from a corrupted user profile to a new profile [support.microsoft.com]