Updating your Windows XP OS is one of the three ways you can keep your computer safe, because they may have seen exploits in security and found ways to fix them.
There was a virus at one time called MSBlast and it infected computers with Windows XP that didn't have the most up-to-date OS. It was sceduled to electronically attack Microsoft's Windows help web site on August 16, 2003, but that's over now.
However, similar attacks may have been planned out by virus programmers and hackers, so make sure your computer's OS is up-to-date!
Also, not having Antivirus software is the #1 surefire way that a virus can infect your system. Newer Antivirus software like Norton AntiVirus 2003 and McAfee Security Center have Auto-Protect features that virus scan Word Documents, IM File Transfers, Outgoing E-Mail, and Internet Downloads, but performing full system scans once a week is the only way you can be sure that all viruses, trojan horses, and worms don't attack your computer.
By the way, I checked my system32 folder, and didn't find System32.exe, so it must have been faked.
HP Pavilion | Intel Pentium 4 CPU 2.40 GHz
512 MB Ram | NVIDIA GeForceFX 5600 AGP, with 256 MB Ram
