Three days ago I got something on my computer after my friend tried to idiotically get a torrent for Sexy beach 3 on my computer (I really think he was dissatisfied with DOA:X2 as he did this right after he bought it.

)
I'm beginning to believe this is a virus of some sort, probably Trojan. Basically on my start bar to the right next to the clock (I don't the official name) it shows this shield icon that flashes from an X with a red background to a ? with a blue one.
It keeps on telling me that I have some form of virus on my computer and keeps recommending a spy ware remover. It shows this message in many random forms and keeps giving me pop ups to various spy ware removal programs, "cograts you won something" crap, and porn.
It doesn't hinder any programs or anything, nor does it slowdown, but it does freeze whatever I'm doing when it pops up and it's also very annoying.
So can anyone help me get rid of this? I've tried everything I could think of.
EVERYTHING