It seems this is due to Internet Explorer's Protected mode. Since IE's tabs are run with a low integrity level, they can't modify files with a medium or high integrity level.
Thus, IE creates this folder so that IE plugins can write where they want. When they ask for a file, the one in the Virtualized folder will be shown instead.
As you have guessed, this is a consequence of UAC, since it is required for IE's Protected Mode to fully work.
Those files can be deleted, but the "Yahoo! Companion" (a toolbar, maybe ?) 's preferences might be lost.
However, you should uninstall that Yahoo thing unless you really need it, as IE add-ons are known to slow it down.
DO NOT DISABLE UAC it's there for a reason. All of those files are in your appdata folder therefor you can delete them with UAC on, and yes from the looks of it the yahoo files you will lose yahoo preferences if you delete them
AGAIN D O N O T E V E R D I S A B L E U A C EVER EVER EVER EVER!!!!!!!!!!
Partial Post Edited as I confused Virualized folder with VirtualStore folder
OK, I did disable it, I will reneable it but .... it slows down the computer so much and even when typing on line the text appears a few seconds after typing.
I did enable it due to the MS DLL thing.
Is there any way to avoid this, I use Ccleaner many times during the day. My system is Vista Home Premium SP2 and I cannot use the secpol thing to configure UAC, and it's not only the virtualized folder some compatibility folder is some apps is also appearing, some apps have to be opened as administrator or it's impossible to save changes in some 3D progs.
The thing was : typing "on line" like now, it's like the text "had" a delay in showing up and with UAC disabled I never had that, it seems better now.
Maybe you're right about an infection, did a malwarebytes scan already and did not find anything.
I had no idea about that virtualized folder until yesterday CCleaner came up with such a huge file that I went looking for details. Surfed around this morning, disabled the 24 hours thing on CCleaner and so far it did not find any of that stuff again..so I suppose it's only generated in connection with a specific action, download or searching, don't know.
Also yesterday I tried to install the new version of HJT and got the warning that it could not be installed on a non-existing drive (probably that C file) today it went OK but have to run the app as administrator in order to get it working, did that but it says that HJT is already running, I suppose restarting the computer might solve that.
Every day the computer is scanned by mbam and KIS's quick scan and nothing was ever found.
I will perform a full scan now with KIS and wait for the result.
Strange things happen to computers, but this is beyond my comprehension. That C\ folder seems not to reappear (deleted it) but nevertheless I'm sure it will be recreated soon enough. I cannot find it on the laptop either but I don't use this one extensively.
Thanks for your reply.
In the meantime I submited a HJT log in the forum of Blue Medicine, that will take some time to get a reply there, and .... that virtualized folder came back with a vengeance, almost an exact copy of the thumbnail cache and slowed down Internet Explorer again, deleted it. Drives me nuts.
UAC maybe for safety and clicking OK if I want or not open some file or program does not disturb me but filling the memory is.
Disabling Protected Mode is not a good idea. Why don't you add the Virtualized folder to CCleaner's Exclude list ?
Maybe not, but the virtualized folder is just the thing that makes the computer slow down, and adding it NOT to be removed is probably not a good idea as well.
Mind you when the computer is restarted IE is back in "protected mode". For the moment I'll leave it on and surf with Google Chrome which is getting an update tomorrow (11 patches)and use alternatively IE and Chrome, according to the protection I need to have for a particular task, like downloads etc.