What Is up with my computer?

I think my computer has completely crashed. It all started when one day when I turned on my computer and, every ones account pictures changed to the default. At first I was a little estrange by this but, I proceeded any ways and when I logged on, and message appeared quoting, that Microsoft Office XP had been installing, and the bar below started to fill be soon stopped, when being interrupted by another pop up stating that "The feature I was trying to use was on a CD-ROM or removable disk, that was no available" below instructed my to insert the disk that contained Microsoft Office XP (which i do not poses) and click "OK". so since I don't have the disk the computer asked for I had to clicked "cancel". then right away the computer started to uninstall Windows Office XP. I quickly went to "Start" and investigated my programs and almost all my Windows and Microsoft programs were gone and I was left with Windows media, and movie players(updated versions) and programs I had downloaded separately. I was left with no sound, no applications, and no Internet Explorer (i use fire fox any way). I still have my pictures and music. Everyone is telling me that it has a virus but i do have virus protection (avast) what do i do? i will do anything like to download a new virus protection or even start from scratch.