How to deal with browser hijacking?

I’ve been trying to debug my parents’ computer, which has windows XP. They’re using internet explorer (yeah, I know, not the best choice, but that’s what they’ve got), and IE started sending them to random sites when they clicked on various links. I used avast! antivirus software and edited the hosts file, and things have improved, but they’re still not back to normal.

Then I got the idea to look at the C:\WINDOWS\system32\drivers\etc folder, where the hosts file is located. According to the folder properties, there are 6 files inside the folder, but only five actually are visible. Even setting folder options to “view hidden files” doesn’t make the 6th file visible. So, my questions are:

1.) Is it possible to have a ‘hidden’ hosts file that’s actually controlling the hijacking?
2.) If so, how does one find it and get rid of it?
3.) If that’s not the case, any other suggestions on what I can do to stop the browser hijacking?