You need to disable the windows restore feature, restart your computer, then turn it back on if you need it. To get there, you can right click on "My computer" and select properties. The system properties box should pop up. I haven't worked on a Windows ME system in a while, but it should be on the very last tab to your right, or the second to last tab and there will be a checkbox asking you to enable Windows Restore.
If you can't get rid of the files, you may need some kind of filewiper that can delete that file straight off the hard disk. Have you tried doing a command line based delete?
Have you tried scanning in Safe Mode? Norton's may be able to get rid of that trojan in Safe Mode rather than a scan done in regular startup.