I realized that my system was infected with virus but had no clue in identifying the virus and removing it. I installed the latest Malicious software removal tool offered by Microsoft but of no use. This tool was not able to detect the above virus.
I thought the virus could have made some changes in the startup programs. I opened msconfig but I could not open the startup tab; may be the virus was too intelligent and it did not allow me to access startup programs. I checked the list of applications and processes in task manager, killed suspicious processes but this one also did not help.
Then I was weighing on the option of reformatting my system but luckily I had found this trial version of SUPERAntiSpyware. I installed it and did a complete scan of the system and it detected around 50 threats. I could remove them all using the same software and after reboot my system has started functioning as usual.