Linux. Seriously.
I have Windows 7 installed on my laptop but I don't use it often, it's sole purpose is for ripping CDs with EAC. If I really need some Windows program on my workstation I run Virtualbox, but I have to say from Vista onward Windows made huge security improvements. If you have XP install Windows 7 first, older systems can't be considered as a solid foundation anymore. If you don't want to buy Windows 7, get Linux instead. Just to make my self clear, I'm not advertising for Microsoft.
ThatOtherPerson is right. Microsoft Security Essentials covers everything you would want from an antivirus program.
Common Sense 2011 Fnord Edition is good, but incompatibility to malware is even better. Be aware that incompatibility can't protect you from internet fraud. Though incompatibility is the security through obscurity approach, it's proved to be working well. An Ubuntu user
with administrative rights installs and uses much less crappy software than a Windows 7 user
with administrative rights. As mentioned before I'm not talking about XP.
LOL! Or you could just install a security suite which would do all that and more... but some people like to scratch their left ear using their right hand..
He has a very sophisticated setup there. It goes far beyond of what regular security software suite bogus could and
should provide. Those suites are the marketing approach to security consciousness made by people who don't understand security at all, but selling products. They are not your friends.
A short example. All suites come with a personal firewall. Why? Windows already has one built in and other OS like Linux also do have a solution right built into the core of the system. If you really want a personal firewall you would want it there, not as a external program by an external vendor. Personal firewalls in general are a bad design, but it's just one feature of those suites, which wouldn't be "complete" without this feature in marketing terms. There are these firewalls that proudly show you every "attack" against your machine. Why? This is not professinal, this is marketing. Professional tools keep logs in plain text and standard format somewhere in your filesystem where the average user doesn't bother to look into. If the system firewall was broken, the reasonable solution would be to fix it instead of replacing it with another mediocre product. That's what developers of other OS do, but for "the steamy pile of crap" you just waste your money on another product.
«Our firewall has moar features!» «Pardon?»
PSI is a good tool, though again it's marketing for Secunia. The average Linux distribution comes with a package manager, a tool of which PSI is just a half-assed copy. Note, that there are package managers for Windows out there, but you should rather get familiar with Linux.
Backups are good and should never be handled by an antivirus, due to the single point of failure. It almost made me laugh, when I heared that some computer magazine in germany had trouble to get their issue into print due to a bad antivirus update. Priceless! They still do this wooden stuff.
On the application side, sandboxing is a step forward, but sandboxing everything and not taking care of vulnerabilities is a bad habit and so is the behaviour of antiviruses fuzzing with the webbrowser. It's sad to see that
NoScript is the only solution for controlling Java Script in your browser, a powerful programming language with no security consciousness at all, just an on/off switch.
WOT is an awful misinterpretation of the
Web of trust [link].
The better advice to "Never touch a running System", is "For minor problems, reboot. For major problems, reinstall!". Windows only, of course.
Last but not least: Good habits for passwords are mandatory.