The best way to protect your computer is by using multi-level defenses.  I highly recommend that all methods listed on this page be used.

#1 Prevent the virus/spyware from getting to you:
  a.  NoAdHosts  (From http://www.everythingisnt.com/hosts.html).  This prevents your computer from knowing how to talk to sites that do ads.  This is particularly usefully for Hotmail and other sites that require Internet Explorer.  It can also be used to prevent kids from using online games.
 
#2  Prevent serious damage once you get hit
    a.  For viruses:  I use a commercial anti-virus from work.  AVG Anti-Virus is well regarded.
    b.  Run SpyBot about once a month; install its immunization tools.  I like spybot because it is fairly fast on a big system
    c.  Run AdAware about once a month.   AdAware uses different list and algorithm than SpyBot (so you need both).
    d.  (Optional) HiJackThis.   Finds anything that runs automatically.  Fairly difficult to understand, but you can search on the web using its results.

#3  Don't use a browser with deep hooks into the operating system like Internet Explorer.
    b.  Use IE only for purchases.
    a.  Use  Firefox for protected browsing.
         i.    AdBlock: My favorite Mozilla ad-in:  some settings: adblock.txt
         ii.   Prefbar
               Add Button "Close" to prefbar
               OnClick  "BrowserCloseTabOrWindow()"
         vii. Download Statusbar
         ix.  Flash Block

#4  Fix systems that have had problems
    a.  X-Setup  This program is a great tweaker.  I use it to get rid of adware that is "friendly" such that AdAware & SpyBot does not consider it spyware..

#5  Sites with good info on Virus/Spyware
    a.  http://spywarewarrior.com/viewtopic.php?t=2958
    b.  http://killspyware.shorturl.com/

#7  If you have a WiFi router:
    a.  Cheaper routers can be better.  Less code; fewer holes.
    b.  Always change the password
    c.  Be very careful to not use Windows XP Home Simple Sharing.  If someone gets into your router, XP Home lets them into your computer.
    d.  Must us encryption because of FireSheep

Other Computer Tricks:
a.  Easy Linux distribution:  Ubuntu. 
b.  Keyboard sharing:  Win2vnc
c.  PDF:
    create PDF's with PDFCreator
    edit and view  PDF's with Foxit Reader
    Foxit allows Viewing and editing PDF files, but you can't save without buying it.  Just print it to PDFCreater to save.
d.  PhpGraphy Easy to setup Photo Gallery


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