Java problems, + other weirdness

I recently reloaded Windows 2000 for the 3rd time because of an ongoing
virus infection. The most recent was a clean install where I completely
reformatted the C: drive. My virus scan software does not indicate any
infected files, and the system 32 files should be okay because they are
newly loaded from my installation CD.

The main problem I have now is that Java doesn't operate well. It works
when I first get online, but then it gradually deteriorates and eventually
I have to reboot the machine to get it working again. I have tried to
reinstall java from the java executable file, but it tells me that "Java
cannot be installed with the current Internet Connection proxy settings."

There are other things going on which may be related;

1. My online virus scan service is constantly alerting me about viruses
that have been detected and cleaned. In almost all cases, the files which
were cleaned of viruses (or deleted to get rid of the virus) are DLLHOST.EXE,
SVCHOST.EXE and SPREAD.EXE. Sometimes I also see MSNV.EXE and MUSIRC74.EXE.

2. Periodically, a window pops up telling me that SVCHOST.EXE has generated
errors and will be closed.

3. After the java failure, even when I get offline some strange things happen.
For example; if I open Excel, it tells me I cannot use object linking and embedding
and then it closes. And when I look in My computer in the C:\Program Files folder,
no folders appear, although it says there are 27 items in there.

What is going on??

Nick