I found it!
Well actually I found where it was coming from at least. I completely locked down my system. Wrote some code to monitor real time file access and then started from step 1 and did everything in order that I was doing previously up to where the test machine would become infected.
I had noticed a few times that AVAST reported some type of outside connection attempt which it blocked. Although I knew it was related to this situation, I had not any idea what caused the problem, rather what file or access was causing it. Being a novice at viruses, I was not realizing that I could use that to actually help find out how I was being infected.
Anyhow, I formatted and installed a clean copy of Windows Vista. After booting, I first ran the code I wrote to monitor real time file access. I also blocked ALL incoming and outgoing network connected and only opened them as needed, closing them after they finished being used… i.e. windows updates etc… I followed the exact same steps I had always done before after that. I installed AVAST, next installed Windows Updates and patches, rebooted.
After reboot, I installed Firefox, Daemon tools, ATI drivers, Creative drivers and Alchemy for my xFi card. After completing all that, I rebooted again.
Next, I went to install the tools and add-ons I use in Firefox. Only about 10 or so including FireFTP, Forecast Fox, ColorTabs and a few others. Ones that I have used for at least a couple years without problems before. So imagine my surprise when suddenly, AVAST starts warning me about connection attempts to the .pl URL!!
It appears one of the add-ons or the webpages for the add-ons is infected and THIS is where I have been getting hit from! The problem is I do not know if it is from the main Firefox site and the pages containing the add-ons or if it is from one of the pages that opens usually after installing an add-on. I will do some further testing to isolate more but for now, at least I have an idea of what is going on.
To test this out, I uninstalled Firefox completely. I then scanned the system and it came back still clean. I then opened both incoming and outgoing connections to normal traffic. I installed Firefox and ran it. So far no problems. I then start moving through the web pages installing the add-ons I use. Suddenly my little real-time file access tool started churning out hits and AVAST started showing those URL connection hits to the .pl address. And sure enough, within short order, I again started getting Win32:Vitro hits through AVAST.
Now here is the confusing part for me… Instead of letting AVAST delete everything or even attempt to do anything, I pulled the power plug hot. I booted up into safe mode and deleted and uninstalled Firefox completely again. I ran a scan and all came back clean then.
So I rebooted normally and ran another scan. It too came back clean now! In other words, ALL those hits I started getting for infected files were GONE without me doing anything except a hot power off and safe mode uninstall of Firefox and its plugins I had installed.
I then ran my file monitoring tool and again installed Firefox. This time I have not installed any add-ins at this point. For the last two hours now, I have been using the machine, websurfing, installing and uninstalling software and my tool is showing normal file access and not a single beep from AVAST has appeared nor has it shown any alerts for internet URL connection access.
Q: Do we know for sure that Vitro is actually infecting the files or was this just a fluke? Usually one has to actually execute a .exe file for the system to even process anything having to do with it. If the file is never accessed then how would it get infected? The only way a virus could even know about the file is if it were hard coded, if the virus could read the directory structure of the drive or of course if the file were executed.
yet MOST of the reported .exe files that are being reported as infected, I know for fact were NEVER executed or even looked at. First my real time code shows that clearly. The files were never logged during this. Second, some of the .exe files are files that are pretty obvious if they are run… Calc.exe, notepad.exe, and others. Had those been executed, it would have been obvious yet they were not and still the system reported them infected… until AFTER I cut power, rebooted, and checked again after safe mode uninstall of Firefox and its addins. In other words, after pulling the plug and simply rebooting, all those hits went away and those files again showed clean.
Something here is not making sense to me. I was taught in my training in the U.S. Navy one very important acronym… B.I.T.E. ALWAYS TRUST BITE! So you ask, what is BITE? It stands for - Built In Test Equipment. In this sense, AVAST and my real time monitoring code is my BITE test equipment. If I trust both of those, then something is causing them to report false positives which leads to users deleting and corrupting numerous system files and so forth.
If I do not trust BITE, then this virus/worm is indeed infecting but doing so in a way that makes us think it is doing more damage than it initially is. A trojan horse. While we look one direction, it is actually going another direction. And by us following that one direction, we in essence unknowingly cause the actual spread through out the machine as we click on and actually execute files.
You see that is where I was so confused. Not only was I not understanding where it was coming from (with your help was able to learn and figure that out) but I was not able to understand how within 30 seconds or so, HUNDREDS of files were suddenly being corrupted! THAT was what was throwing me for a loop.
Based on what you have told me, what I have read and what I have been experiencing, I think it is NOT infecting all those files that quickly, rather it is not infecting all of them initially. By attaching itself to the system processes, you start getting memory hits right and left yet the actual hard copy may not yet be infected until you somehow actually access the file, whether via the virus scanner or manual execution. When I pulled power hot, it cleared memory. By uninstalling in safe mode, scanning and removing anything it found, which in this last test was nothing, I was able to boot again and not get infected because 1) I figured out WHERE I was getting infected from and 2) because in reality the hard copies of all those files being reported were not really infected yet. The copy in memory was.
I may be totally wrong especially in that I am just starting to learn about viruses. Looking at this from a common sense approach along with what I have done and seen, leads me to this point. For now I will keep playing around. I now want to find an actual hard infected file so I can dissect it. That may lead to more information although, I am not at all a assembly level programmer which I have been told is what a lot of viruses are written in. If they are in VB or C++ then we are in business but if they are in assembly, forget it! 
So oh great teacher, am I on the right track, way out in left field or somewhere in between? 
BTW, I agree with you… Atlanta. I have a ‘friend’ from my last career that is also very well versed in this stuff. He is doing some tests of his own now for me. I am looking forward to seeing what he comes up with.
I also wanted to mention that I really do want to learn this stuff because it is getting serious now. I do not know if you have seen the news in the U.S. today, but it is now being reported that our entire electrical grid and infrastructure has been compromised by just this kind of thing. Hopefully those like me who are still in government service and the military have been able to defeat whatever was introduced by the hackers. Still, things are changing and although I am far from an expert in this field right now, people like me with the real world experience who can switch over and get involved in the cyber world experience are definitely needed from what I can see. We just need some help in learning about this area when it comes to viruses, worms, trojans etc…
And who knows maybe something those other people who are like me do or perhaps some of the dumb questions we ask just might trigger a thought in someone else that can lead to defeating a virus that has been tough to kill. Perhaps something we do that is unorthodox or not the ‘norm’ in the civilian cyberspace can actually help those companies and people like you come up with better and better tools and software for the rest of us to use. I have learned that sometimes it takes not only another set of ‘eyes’ to look at something but also a completely different ‘view’ by someone who looks at the same thing from a different perspective.
Malakie