Hi again, It occurred to me that I should explain the reasons for all these steps. The hardware firewall makes your computer essentially invisible to the outside world. While there are still ways to get around a firewall, it takes effort. Most of the creeps will give a few cookbook tries and then move on.
You want to pick up a hardware firewall/router first thing if you don't have one. One side connects to your DSL modem and then you'll have 4 or more ports on the other side. Pop over to Circuit City or Best Buy and you should be able to grab one for under $50.
The software firewall protects your computer from problems on your own local net. Let's say you're running a small business and a visitor plugs an unclean laptop into your network. The software firewall gives you protection from that event.
Next thing is to see if you have a software firewall. I'm assuming you're running PCs (since these problems are almost nonexistent on a Mac). If you're running WinXP, you should have it built in. Just make sure it's turned on.
Virus software protects you from yourself. There are all sorts of ways that viruses make it into your machine, but most of them require your own intervention. You open a bogus email, run a bad program, visit a trick website. Even with incredible diligence and discipline, you can still get fooled.
Then purchase some virus software. At my job, where Windoze machines are in the majority, we use Macafee. I think Norton have taken their eyes off the ball a bit. Make sure all email-scanning is turned on, as well as scanning of removable media. The software will have the means to periodically update itself. Make sure you take advantage of that feature. Also do a full system scan every once in a while. Actually, before you even install it you should boot from the CD and scan first.
Finally, make sure that everyone using a computer at your location is sufficiently paranoid. Never install free software from a friend. Ad-blocking software, free screen-savers and such are often the distribution point for mal-ware. If you're looking for free stuff, you're better off checking a reasonable source like download.com. A good rule of thumb is "if you don't really really need it, then don't put it on your computer".
The main point is that viruses are just the nose of the camel. There are all sorts of terrible things that can happen to your computer. The virus is the domain of the archetypal snot-nosed brat with brains. The other stuff is increasingly a tool of organized crime.
I was recently visiting my brother in NC. He's a bright guy, but not a computer whiz. His Windows98 computer had been on a cable modem for 3 or 4 years, unprotected. By the time I got to it, it had been completely enslaved and was blasting out spam and viruses for creeps unknown. I only had time for a short visit and couldn't completely clean it up. It would have taken days.
Michael