(1) Can anyone explain exactly what bad thing has infected my computer?
[b]Win32/Sirefef[/b] http://www.microsoft.com/security/portal/threat/encyclopedia/entry.aspx?Name=Win32%2FSirefef
(2) What should I do with the various files that are in the virus chest (i.e. should I simply delete them? I'm nervous about deleting them and affecting the running of my computer)?
that is what the chest (quarantine) is fore, so you have the option to restore so there is no rush to delete from chest

avast! 8.x: Using the Virus Chest
http://www.avast.com/faq.php?article=AVKB21

Clean, quarantine or delete
http://antivirus.about.com/b/2007/03/11/clean-quarantine-or-delete.htm