"program error" problem

I was working on an image today and suddenly couldn't do anything. I get an error message that says either "cannot complete operation due to program error" or "insufficient memory". I can't even close the program - have to go thru task manager to close it. After rebooting and reopening photoshop, it opens to all default settings, with a window asking about setting my color profiles. I've closed and reopened it several times and always the same - it opens at default settings, I click "no" for setting color profiles, and can open an image using the file browser, but after that, I can't do anything.
Anyone know what may have happened and how to correct it?

Should have noted - using version 7.0, have tons of free space on hard drive & 256 RAM. (I'm not a techie, but I believe thats the right RAM number.)

Before I started having trouble with PS yesterday, I had deleted a file called "twaintec.dll" from my C:\Windows folder. Its part of a ad/spyware program.

http://www.pestpatrol.com/PestInfo/t/twain-tech.asp

I was leary of following the complete manual removal instructions, so for temp measures, deleted the "twaintec.dll" file from the directory.

Today, I checked that folder and the twaintec.dll file has regenerated itself, and Photoshop is now working fine again.
So it seems this scumware has somehow attached to PS. Now I am afraid to go thru with the complete manual removal, for fear it will booger up PS again.

Any advice would be greatly appreciated.