Viruses and worms, Help!

My sis has complained about getting viruses on her computer forever. I'm housesitting for her, so I thought I'd surprise her and fix things.

She has PeoplePC dial-up, and mainly uses the computer for e-mail and to book flights. I found out that she only has Ad-Aware 6 on there, and downloaded AVG. Found out the hard way that she hasn't had her updates in quite some time. She didn't have service pack 2 on her Dell with XP, so I downloaded that.

Afterward, I could not get online. Kept telling me that the page cannot be displayed. I wanted to update to Explorer 7, (she has 6), but I tried all I knew to do to get online, and although it does go online, cannot display the page.

Tried putting it back to the last known good configuration, and now it won't connect because in the past she'd used a different password. Says it's the wrong password. I would try to reformat, but then she will lose her PeoplePC account.

Any techs out there that can help? I need to get this figured out before she gets back. Don't want her mad at me. (I'm using my own computer to try to get some help).