Content Encoding Error On All Devices

I'm getting a content encoding error whenever I try to go to any site. Sometimes i dont get the error instead it's just code or all the images are scrambled or saturated in red or just random colors. I can access secure (https) sites without any problem at all. I attempted to try again after disabling my firewall but still get the same problems. I tried using Internet explorer and firefox and the problem is identical for both. I am runnin this on a desktop with xp.

I have tried using my laptop running vista and connected wirelessly and get the same issue. I attempted to watch a movie on netflex instant watch through my playstation 3 Netflix app and the picture is distorted and oddly color and will not play the movie.

I reset my router and called my ISP. They are having techs do maintainance in my area but I am not sure if that is what's causing the issue. I spoke with a tech who told me that my modem was in time out and he could not reset it. When untold him I'm not having connectivity problems he said he would notify someone in another department and send a tech out.

Also to add the last time my internet worked I saw that there was windows updates ready for install. I shut down my computer and went to work came back and the issue started as soon as I turned on my pc. Also the basic windows malware scan picked up a virus (win32. Alureon(sp?)) I used the malware removal tool to partially remove it and attempted to run malware bytes to check for it again. I updated the definition then received an error when I tried to run it. I attempted to reinstall malware bytes and receive an error everytime I open the installer. I had full scanned my computer with malware bytes and spybot about a week ago and it was clean.