Please, URGENT help with security attacks and errors on my PC! y.exy!

I’m a pretty safe browser, and up until August I never had a single virus problem in my 7 year PC ownership.  I got one rogue antispyware, and after that, viruses have just been popping up out of the blue.  They seemed to not be serious, but things are getting pretty bad now.  Norton just gave me a high level warning that fottovi.net tried to intrude my computer and that attacks are common from its IP.  It gave me the path, /DEVICE/HARDDISKVOLUME2/PROGRAM FILES/READER 8.0/READER/ACRORD32.EXE, and said fottovi tried to download a “suspicious exe”.  After that I started getting a lot of weird errors, like “y.exy (which seems to be a new virus) error”, or “Virtual Memory nearly surpassed”, and a bunch of error codes from Abode Reader.  I unplugged my computer to keep it safe from any further intrusion attempts, but…well, what the heck should I do now?  Should I just format my hard drive?  It seems like a hopeless case to save it now.  Is this a bona-fide security breach?  Please help!