Actually, the problem you are describing sounds like a broken .Net Framework, an infection (as you've surmised) or some pretty significant corruption of Windows itself.
The removal tool should work, assuming .Net Framework isn't broken, by right clicking and selecting Run as Administrator (assuming Vista) or simply by double clicking it on an XP machine.
To repair .Net Framework 2.0 on XP:
Open Control Panel
Select Add or Remove Programs
Locate Microsoft .Net Framework 2.0
Select the entry and when the installer launches, select Repair.
Reboot when it completes.
Alternatively, see this KB article:
http://support.microsoft.com/kb/306160
To remove a corrupt .Net Framework install, use this tool:
http://cid-27e6a35d1a492af7.skydrive.live.com/self.aspx/Blog_Tools/dotnetfx_cleanup_tool.zip
The download of .Net Framework 2.0 can be found here:
http://www.microsoft.com/downloads/details.aspx?familyid=0856eacb-4362-4b0d-8edd-aab15c5e04f5&displaylang=en
To repair .Net Framework 2.0 and 3.0 on Vista, see this blog entry:
http://blogs.msdn.com/astebner/archive/2007/03/26/how-to-repair-the-net-framework-2-0-and-3-0-on-windows-vista.aspx
Note that after repairing or reinstalling .Net Framework, you will need to reapply the .Net Framework 3.5 SP1 update via Windows Update.
If the above does not resolve the problem with OneCare, please contact support:
How to reach support (FAQ) -
http://social.microsoft.com/Forums/en-US/onecareinstallandactivate/thread/30400b52-7f26-4ba0-bc18-17e305329d90
Since you may also be suspecting an infection:
Start here -
https://support.microsoftsecurityessentials.com/
and select the link that says - I think my computer is infected - and then select the support option for phone (or email if phone is not offered for your region)
Or for email support in English:
https://consumersecuritysupport.microsoft.com/eform.aspx?productKey=pcsafetymalware&ct=eformts&supportLinkeformts=E-mail
If you are in North America, you can call 866-727-2338 for help with virus and spyware infections. See
http://www.microsoft.com/protect/support/default.mspx for details.
For international information, see your
local subsidiary Support site.
And, since you are trying to install MSE, another option is contacting MSE support:
To open an email support case, start here:
https://support.microsoftsecurityessentials.com/
-steve
~ Microsoft MVP Windows Live ~ Windows Live OneCare| Live Mesh|MS Security Essentials Forums Moderator ~