I believe that is a virus....I would check out malwarebytes and the forum http://www.bleepingcomputer.com/forums/..

It will explain how to remove the virus...

Windows Vista Recovery is a fake computer analysis and optimization program that displays fake information in order to scare you into believing that there is an issue with your computer. Windows Vista Recovery is installed via Trojans that display false error messages and security warnings on the infected computer. These messages will state that there is something wrong with your computer's hard drive and then suggests that you download and install a program that can fix the problem. When you click on of these alerts, Windows Vista Recovery will automatically be downloaded and installed onto your computer.

Once installed, Windows Vista Recovery will be configured to start automatically when you login to Windows. Once started, it will display numerous error messages when you attempt to launch programs or delete files. Windows Vista Recovery will then prompt you to scan your computer, which will then find a variety of errors that it states it cannot fix until you purchase the program. When you use the so-called defragment tool it will state that it needs to run in Safe Mode and then show a fake Safe Mode background that pretends to defrag your computer. As this program is a scam do not be scared into purchasing the program when you see its alerts.

To further make it seem like your computer is not operating correctly, Windows Vista Recovery will also make it so that certain folders on your computer display no contents. When opening these folders, such as C:\Windows\System32\ or various drive letters, instead of seeing the normal list of files it will instead display a different folder's contents or make it appear as if the folder is empty. This is done to make it seem like there is corruption on your hard drive that is causing your files to not be displayed.

You should follow the instructions in the link provided..

I would not suggest attempting to remove this yourself..

Here is a link that might be useful: Malware help!

you are not the only one to get hit I have already sent several people from here to the same forum zep mentioned above to get help to clean out this infection.

You definitely do need to go to that forum and get help this is not one you can clean alone you need special scans and the assistance of the support forum team to get it fully removed.

Just go there register, and start your own thread here
Analysis and Malware Removal

I am there also, so is Zep, if you need help getting there let us know. Just tell there exactly what you told here.

Can I post the screen shot over there and if I can..how?

Thanks for the link(s) Zep and RavenCajun!!

You don't really need a screen shot. There going to deal with the malware and running through that process will likely clear up your folder issues.

You could just provide a link to this thread actually you should do that. Then they can see the folder issue here.

Thanks again!!

The exact same thing happened to me after getting this virus/trojan...after going to the forum which RC directed me and getting cleaned up, I did this..copied this from another locale.
1.Close all programs so that you are at your desktop.
2.Click on the Start button. This is the small round button with the Windows flag in the lower left corner.
3.Click on the Control Panel menu option.
4.When the control panel opens you change it so you are using Category view.

1.Click on the Appearance and Personalization link .
2.Under the Folder Options category, click on Show Hidden Files or Folders.
3.Go to step 5.

5.Under the Hidden files and folders section select the radio button labeled Show hidden files, folders, or drives.
6.Remove the checkmark from the checkbox labeled Hide extensions for known file types.
7.Remove the checkmark from the checkbox labeled Hide protected operating system files (Recommended).
8.Press the Apply button and then the OK button..
9.Now Windows 7 is configured to show all hidden files.
Please note that you will now see icons that were not previously visible. One of the most common concerns is that you will see a file called desktop.ini throughout your computer. These are legitimate hidden files and can be ignored.

Note: Some of my folders on the desktop when the re-appeared where paler in color to the ones that were there all the time..Found out, that I had to rebuild those file folders ie. go to the location from which I made a shortcut and remake that shortcut and put the new shortcut in the file folder..For example: I have one file folder on my desktop which contains shortcuts to all the forums I participate in...maybe 10 or so..I had to go in and redo those 10 shortcuts and get rid of the old ones..after that, the folder was as it should be...hope that explaination makes sense

Thank you for item #6 Gene, it was something I was always going to look for - later. Later never came till now ;~)