> This was possible as it was using WEP which I've read can be hacked using brute-force!?
Have you also changed the default password for the router admin account?
> I then got a virus/malware which created loads of pop-ups in IE8
Personally, I would suggest either firefox (with say the noscript add-on) or chrome.
You white-list what really matters to you and the rest of the crud can be left behind.
Setting yourself up in windows with an "administator" account and a "user" account (which does NOT have administrator rights) would be a big help as well. Surfing the net in "god" mode is just asking for trouble. Even if some malware manages to hijack IE, it will have restricted privileges, so the damage will be far more localised.
Blocking Unwanted Parasites with a Hosts File
Blocks over 15,000 of the rather more dubious sites.
Since reinstalling windows doesn't clean everything from the disk, I would suggest you begin with http://www.dban.org/
Just in case some malware is hiding in the places windows cannot reach.
> Could it be that the external disk is infected and the install of MS Office is installing some kind of malware each time?
This is entirely possible.
Don't you have original CD's with Office?
You could otherwise try http://www.libreoffice.org/download/
, which will read MS-Office documents, and is perfectly adequate (for $0) for any home use of MS-Office.