Hello, my name is Dan.
I will do my best to help you, the only stupid question is the unasked one.
That is a quite detailed synopsis, and indeed I do believe that you have been infected but it has not done much more damage your Adobe software, Adobe likes to put things in places where they do not belong in the Macintosh operating system.
Hence the problems you are having.
Since you have backed up your important data I would suggest wiping the drive and installing a fresh new copy of your operating system.
This will eradicate any and all corrupted system files. It also means that you will have to reinstall your third-party software such as Adobe Photoshop. You cannot safely transfer the old Photoshop to the new system without corrupting the new system.
The same may also be true of some of your data but there is a smaller chance.
I do not think that an Archive and Install would do you a lot of good especially since you have had this problem for some time.
That said, there are a few things that you can try before you go to the extreme of doing this scrape and pave.
One is called a fcsk, this is a terminal command that checks through your hard drive and repairs a lot of different things.
1. Reboot/Startup holding your Command-S key down.
2. At the command line type the following and hit 'Return.'
/sbin/fsck -fy (space between the k and the -)
3. If it finds a problem and repairs it, immediately run fsck again until the drive checks OK.
4. After it has check/repaired your disk, type 'reboot' and hit 'Return' again.
Try doing that and that will certainly help with getting it to boot.
The next thing I suggest you do is called repairing the permissions, this PDF will explain how to do that.
Because you are running 10.5.8 the permissions repair would take quite some time.
I suggest trying those and see what happens, that may put things back in order or it may not, it depends upon the damage.
Please keep me posted. If that doesn't work then we will continue.