Having spent many hours trying to remove scare-ware products from the systems of various friends and family over the years I was very pleased to read that the FBI have broken at least one major crime ring responsible for it.
If you are faced with dealing with a compromised machine, a couple of tools that may help you:
Microsoft Safety Scanner – good for doing a one off scan of a system that you suspect as being compromised.
Microsoft Standalone System Sweeper (Beta) – this is particularly interesting because it allows you to boot from a CD or flash drive and scan a system without actually being booted into that system. This is important because when dealing with a compromised system you never know to what extent any malware may be concealing itself and interfering with your attempts to remove it.