windows Me is not a bad system imho, better than xp home,
not so good as xp professional. i have them all.
steps i might do:

1. run your virus scan again to find the virus you said you saw.
you might have to check several times as viruses try to hide
and virus checkers arent perfect. if you find it, write the address
down.
2. download whatever virus patches that ms has and install
them.
3. in internet explorer delete all cookies and history.

4. go through add/remove software in control panel and remove
programs you know you dont want, especially any downloaded
ones from just before your problems began. under 'properties'
you can find 'dates'

5. in 'system tools' is 'system restore' it will restore your registry
to an earlier date. it doesnt always work, but wont cause
damage and can be reversed.

if steps 2-5 dont work, unload Avg which i think might have
interaction problems with Me and xp home. load if you want a newer Avg version.
if it still isnt working right and you have found the file that the
virus (if you still have one) is sitting in, back up your important
files and delete this one file. chances are that deleting the infected file wont cause problems, but if it does you might have
to repair/reload the Os. almost always the new/repaired system
will keep your files and settings.

a year or so ago i had problems like you are having, except i dont
use hot keys. i and a friend think Avg was part of it but this computer also had a kid visiting porn sites and other suspect
places picking up all sorts of garbage.

don