Is my Network Hacked

What kind of network is this? Is there a firewall somewhere? Is 10.0.x.x a valid address on your LAN?
/RID

It's a simple home network with a main pc and 2 laptops sharing files and a printer.  Internet connection comes into a router which has a wired connection to the main PC and a wireless to the laptops.

The strange entry is visable from one of the laptops.  It is a main folder

I have no such valid address

Well, I guess it's time for a thorough virus and malware scan. Download something you trust and/or believe can scan the computer(s) and then disconnect the suspect from the network and scan it. Are you running a server of any kind, visible to the internet? If so, close the connection (port forwarding) in the router for the time being.
/RID

No server...wouldn't know how

OK :) then it's time for virus scan.... Can't help you with specifics, unfortunately, but you may have comments from experts with more knowledge or you can search the site for "virus scan" or something similar; "free virus scanner" might be a search string that could be useful.
/RID

I'm scanning with AVG in a second.  IT's a work laptop and only has XP Firewall and Symantic Anti-Virus.  I can't see how to scan the specific file with this tool so will use AVG

If it's fine though, how do I get rid of this file?  I can neither left or right click on it nor find reference to it in the registry

Try it in safe mode...

Also, of course, check any autostarting processes/programs (msconfig or check the registry or the services applet in control panel>??? ; I don't have an english windows here to check the proper applet, sorry).
/RID

Do you know anyone named Davide Ramo?  There are several of them
http://www.zabasearch.com/query1_zaba.php?sname=David%20Ramo&state=ALL&ref=%24ref&se=%24se&doby=&city=&name_style=1

Can you ping 10.0.1.158?

Without looking in detail, I would guess someone joined a rouge laptop to your network.  Can you log into and look at your wireless router to see logs etc?  I usually lock down wireless routers by MAC address, so only authorized NICs can use the connection.

How can somebody do that.  I have the SSID hidden and the higher security level on my network?

Where can I check on my BT Voyager to find a log.

Do you think they were just stealing bandwidth?

And no..I don't know anyone calld that for sure.

What you can do is do a lookup on the ip address/service provider and then do a people search on his name in that city until you think you have pretty much narrowed it down and then go knock on his door and ask him what the hell he wants.

Well whilst not connected to the net, I was able to right click and delete the file.  Don;t know is that achieves anything but it's gone.  Seems there was nothing really suggested that did much good though I'm still interested if I can see what happened if expexchuser can continue that thread