|"Also could you please explain the difference between wiping and formatting?"|
Wipeing allows you to select certain files or free space & then delete your files in a secure way.
Such programs are > Simple File Shredder, Eraser, AnalogX SuperShredder, AbsoluteShield File Shredder.
Formatting removes everything off your hard drive.
System Restore option in Windows Me/XP
Users of Windows Me and Windows XP should temporarily turn off System Restore. Windows Me/XP uses this feature, which is enabled by default, to restore the files on your computer in case they become damaged. If a virus, worm, or Trojan infects a computer, System Restore may back up the virus, worm, or Trojan on the computer.
Windows prevents outside programs, including antivirus programs, from modifying System Restore. Therefore, antivirus programs or tools cannot remove threats in the System Restore folder. As a result, System Restore has the potential of restoring an infected file onto your computer, even after you have cleaned the infected files from all the other locations.
Also, a virus scan may detect a threat in the System Restore folder even though you have removed the threat.
For instructions on how to turn off System Restore, read your Windows documentation, or one of the following articles:
How to turn off or turn on Windows XP System Restore