I recently got a machine in the shop which failed to boot after what appeared to be a Microsoft Update. Apparently this was NOT a legit Windows Update Icon and when installed infected all called exe files on reboot.
This Virus is known as W32.Vitro. It is a polymorphic virus. Polymorphic viruses were first seen in 1990. A polymorphic virus is one that replicates itself every time a legitimate program on your computer is run. The file names on your computer will appear to be normal when in fact they are now part of the virus. Each and every program opened by Windows will become infected.
At this time Nortons, Macafee, AVG and others do not detect it. Avast was able to detect it but became infected as well. At this writing there is no way to remove this virus successfully.
A format alone may not be enough. Deletion of the partition, recreation of the partition, a hard format, and complete Windows installation will be necessary.
Back up of files is NOT recommended. The virus infects any external media you may use, burning programs, cdr's flash drives.
This new outbreak seems to have been discovered just this week. There is little information about its transmission as yet.
I will keep you posted as more information becomes available.