Problem is your ie browser was set with too low a security level and you've now been infected with some nasty malware that installed itself through an active-x component. Active-X components were initially designed so that a client machine (ie. one hooked to the internet) can work effectively with a server machine (ie. one serving out web pages )...to take some of the load off the server in processing certain tasks...basically they are little programs which run in the browser...the problem with it is that they can be used for evil purposes...such as calling for files (viruses/malware) from an evil server...and if the client user is running with administrative status on the machine (default owner user in XP)...then they can be installed and take over the system...as you are now experiencing with popups etc...
I presume you've got XP...the safest thing to do is to stop running on an administators account when using the internet and use firefox as your browser... I'd save all your files reformat the system and start again... Password protect all accounts on the system...which will require you to reboot the system and tap F5 repeatedly untill the safe mode boot screen comes up where you can access the hidden administrators account and password protect that aswell through USER ACCOUNTS in the control panel.
Then open up ie...chances are it will pop up some first start bullshit requireing you to configure some crap msn thing ( I can't really remeber what it is but it stops ie from starting up) just close it down and create a web page on you desktop with notepad...type
<html>
<head>
</head>
<body>
</body>
</html>
safe it as "test.html" with the quotes added
double click the file you created and ie should open up without all the config **** if I remember rightly...
Click TOOLS & then INTERNET OPTIONS on the IE menu bar
Select the SECURITY tab
Click the CUSTOM LEVEL button
On the dropdown box next to the label Reset to: click the down arrow and select HIGH now click the RESET button... click OK on the nag message asking if you want to do reset. then click OK on all windows and sub windows to get out of the settings...now you ie has the most security it can run with... but it will loose some functionality.
Basicaly we've just secured it under the administrator account so that alll users will get these setting when they log in...so that they can't screw your machine up again while looking at pron.
Thus endith the lesson. in active-x, html, and ie