One of the finer points of P 2 P file sharing I am afraid people regularly omit to do is ‘Scan Before Opening’, had you done so you would first have detected the errant utility that rounded up all your files, probably a ‘RANSOM WORM’ by the way, designed to collect as many important files as it can then let you know in no uncertain terms the price you need to pay to have them returned safe and well, seems this one’s gone slightly wrong so I guess that virus writers are people too and make mistakes.
In this case unless you can cause the utility to run again, which is doubtful as it now has possession of all your files, it will not reveal to method by which you can put them all back again, as a result there is little you can do except reformat the drive, re-install XP and all you hard won programs and learn a few simple lessons.
Always backup your data, loads of utilities around for doing this automatically.
Always keep your antivirus and Spyware scanners up to date and USE them.
Always understand that P 2 P is like playing hopscotch in a minefield.
Kazaa has long been the preferred home of every limp jawed louse virus writer for many years and the owners have done nothing but encourage them from day one, the lite version is little if no better though I admit easier to control, I suggest that once you get yourself sorted out you never allow this utility back onto your system and if you really do need to go downloading again, use something like LIMEWIRE or a bit torrent service maybe UTORRENTS to obtain your files, even so make sure you use a specific folder for every download and scan it to pieces before opening anything and like myself you may go for months without a problem but always be prepared to accept that these services are inherently unsafe and that if you use them a lot you will inevitably get hit by something.