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My default setup these days (including all PCs at my dev office):

 - Firefox, running Adware blocker + script blocker

 - Thunderbird (+ Sunbird) for email client, including PGP encryption on all internal machines. Does an *awesome* job handling SPAM. 

 - Full firewall, provided by DSL modem directly (ports opened as required)

 - Spybot S&D, installed/run on all systems (weekly full scans, regular updates)

 - WinPatrol, installed on all systems. Awesome for monitoring what is running - and identifying dodgy software (and removing it). Saved my butt a few times.

 - AVG (or other solution) - now free for "home" use. Free daily upgrades. Always running in background, daily scans during lunch (or overnight).

 - Subversion (data repository system) running on all critical/important data. Allows for reverting/updating of files, logging, etc.

 - Daily backup of subversion repository (just to a zip/rar), then copied across network to another PC - and burnt to CD/DVD once per week (or more often). 

...

Total cost of software: $0

Make sure you turn Windows Firewall OFF, and disable the other useless features. 

And just don't install/run dodgy software. If you do - nothing will ever save your system. Its good to have a non-networked machine just for this "dodgy" stuff if you need to run it (i.e. keygens). Run from USB, burnt CD (R/O media). Be prepared to reformat machine regularly.

Also useful to have some backup/restore tool for the Windows registry. That is where a lot of the mess happens these days. 



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