All program/file extensions changed--virus or hardware compatibility?

Have WindowsXP Media Edition with Service Pack 2. Have purchased Limewire 8.0 and AdAware SE Professional with Registry Cleaner. After installing the purchased programs, computer ran fine for months. Downloaded free Adobe Acrobat. About one week afterwards, all file extensions changed, most to "lnk" files, and computer could not open them. Had option to search the web and could open the hotmail, etc., from DSL server. Cannot open programs from the start menu, "all programs" selection. All program icons have changed to txt type icons. Have tried system restore and it worked a few times but my daughter opened her desktop page and AdAware started detecting registry changes immediately. The changes looked like they were in an infinite loop because they continued to change no matter what I did. Started up the computer with the DSL disconnected and powered down and her desktop was still indicating registry changes. Have had hard drive to local computer place, they dumped entire system to another computer and reloaded with virus software running. Once again, was o.k. until I downloaded a free version of Acrobat. About a week after downloading the Acrobat, the same problem occurred. Daughter said that when she clicked on her user name, a program (I assume AdAware) asked her if she wanted to block or accept something and she blocked it; immediately thereafter all the icons changed. She said same thing happened the first time we had the problem. I didn't see it personally. Have tried numerous times to do system restore from safe mode and the problem is still there. For some reason, I cannot install the Recovery Console. PLEASE HELP! I am at my wit's end and trying to finish my taxes on line.