As for Anti-Virus, Norton had the most effective heuristic layer (checking for worisome behaviors in unknown programs, rather than simply checking for known signatures). however, as you and I found, Norton AV slowed the computer down and threw up a lot of false positives.
I'm currently using AVG. I like it, although it depends heavily on signature lists. With daily updates it seems to be doing the job. However, they appear to be trying to charge for their product now, or at least they're trying to charge me. So I'm looking around.
I use Zone Alarm for Spyware. Spybot and Ad-aware are the top names, but ZA is easy to use, and has analysis of PUPs (potentially Unwanted Programs) exceeded only by Hijack This. With all the TrialWare installed on new computers, getting a handle on PUPs is an important step towards protecting privacy, IMO.
An aspect of Zone Alarm firewall that I don't believe is implemented in MSFT One Care is the outgoing firewall. While Word and Excel are great programs, their rich Macro functions (and MSFT's indifference to security) make them ready targets for takeover. ZA's firewall allows you to configure internet access and internal access rules for these programs. So even if a virus slips by and installs itself, it can't phone home with your bank account numbers. For example, I was tricked by MSFT into downloading and installing the spyware WGA, shich was disguised as a critical bug fix. Even though I have this piece of Micros**t installed and monitoring my computer activity, ZA has prevented it from ever contacting the spyware gang that wrote it.