7 is better than XP for security...it's a lot of money though...I'd recommend Linux over both (which is free).
Beware that those viruses spread over flash drives (at least most of the Fake AVs I've seen do), so any that have been plugged into that computer recently might be carrying it.
I'll give you instructions on how to clean the flash drives (or digital camera, MP3 player, any removable USB storage basically). Ideally this should be done from a non-Windows system but here's how to do it in Windows:
Hold Shift while plugging in the flash drive. Don't let go until it's finished recognizing the flash drive and everything.
Open Windows Explorer through the Start Menu.
Click the dropdown next to the address bar and choose the letter of the flash drive. Looking at the flash drive's contents any other way will cause the virus to execute.
Go to Tools, Folder Options, View. Show Hidden Files and folders, do not hide protected system files.
Now we'll see if the drive is infected. If the drive has an icon that looks like a folder in Windows Explorer, you know it's infected right off the bat. Look for autorun.inf. If it exists, it's almost certainly infected. A few special-purpose flash drives use autorun.inf for legitimate purposes but they're incredibly rare, and deleting autorun.inf won't stop you from using them.
Open Notepad, look for Autorun.inf and drag it into Notepad.
Delete the .exe file specified in Autorun.inf, then delete autorun.inf. If you're worried you may have one of those rare flash drives that require the file, you can rename both files for safety (postfix the filename with an underscore or something), and then delete them when you're sure.
The drive is now clean. You can undo what you did in Step 4.
