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Miketheman, doing a total reformat seems a bit extreme unless you don't really have much of a configuration to lose and depending on how you restore your files, I don't think you're guaranteed to be free of the malware payload anyway when you restore your stuff.

What you might want to do is install something like Little Snitch to scan your outgoing network traffic to see if anyone may be trying to snoop on you or if your computer is getting any unusual traffic from totally unknown sources:
http://www.obdev.at/products/littlesnitch/index.html

It'll eat up a bit of time for you to be monitoring stuff through Little Snitch and you'll probably panic a few times at some false positives, but it's a very handy program to have if you're a freak about ensuring your own privacy and confidentiality.
 
Ok just for giggles and grins if you haven't blasted your machine away, but (and this is kinda the obvious here so pardon me for asking) but did you check your Desktop and Screensaver settings to see if you have a check in "Change Picture <drop down options>" and it's set to "When I log in" or something?

I read through the posts and no one seems to have asked that so I figured I would. I have seen that checked before and a friend of mine freak out not realizing he might have accidentally checked it, unchecked it and it hasn't happened since.
 
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