Hi xdelton, welcome to the forums
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Do you have a keyboard or other device plugged in to your machine with a mute button or volume control slider? I've seen one case where a keyboard with an audio panel was interfering with the audio settings.
It sounds like (pardon the pun) that you've got 2 distinct problems there. For the sound problem, I'd try upgrading your sound card drivers first of all. If you aren't sure on where to obtain the latest ones, let me know your sound card or if it's an onboard device, the model of the motherboard/laptop.
To remove the virus, it may be worth creating a new thread in the security section on the forums if this suggestion doesn't work - as it's a separate issue and will avoid confusion in the thread. However, I would suggest disabling "system restore" temporarily and then scan for the virus - you should then be able to remove it. You can use the following steps to do this:
1. Click Start, right-click My Computer, and then click Properties.
2. Click the System Restore tab.
3. Select the Turn off System Restore on all drives check box, and then click OK.
4. Click Yes when you receive the prompt to the turn off System Restore.
You can enable it after the virus has been removed using the reverse steps (or using these instructions :
http://support.microsoft.com/kb/310405).