Why is it that when someone talks about getting hacked, everyone brings up spyware and says... download adaware. I will admit spyware is a pain in the ass, but it has NOTHING to do with this situation at all, so why does anyone even talk about it.

What was the content of the email and how do you know it was sent? was it in your outbox or did someone tell you? From the descriptions that you have told, it sounds more like a virus then anything else. The online virus scanners suck. They are great because they are always up to date, but because they are run remotely there are certain things they can't do. AVG is a good program (I have never had any problem with it) and its free, so download it and run it. With a DSL connection you can even have it set to update weekly and not have to worry about it. Get it at www.grisoft.com