Generic Host process for win32 error

I am using windows xp home edition. Recently, the following message shows up at any random occasion: Generic Host process for win32 has encountered a problem and needs to close. Sorry for any inconvenience.

Then, one or more of the following happens:

1) The task manager does not show up when called.
2) The theme changes to something like windows 98.
3) The audio system stops functioning, it says audio device not properly installed.
4) The computer hangs when I try to shut it down.

The description of the error as seen in event viewer is:
Faulting application svchost.exe, version 5.1.2600.5512, faulting module acgenral.dll, version 5.1.2600.5512, fault address 0x000116e2.

The data(Bytes) is:
0000: 41 70 70 6c 69 63 61 74 Applicat
0008: 69 6f 6e 20 46 61 69 6c ion Fail
0010: 75 72 65 20 20 73 76 63 ure svc
0018: 68 6f 73 74 2e 65 78 65 host.exe
0020: 20 35 2e 31 2e 32 36 30 5.1.260
0028: 30 2e 35 35 31 32 20 69 0.5512 i
0030: 6e 20 61 63 67 65 6e 72 n acgenr
0038: 61 6c 2e 64 6c 6c 20 35 al.dll 5
0040: 2e 31 2e 32 36 30 30 2e .1.2600.
0048: 35 35 31 32 20 61 74 20 5512 at
0050: 6f 66 66 73 65 74 20 30 offset 0
0058: 30 30 31 31 36 65 32 00116e2

I have thoroughly checked the computer for viruses and spywares and have cleaned the few spywares that I found. But the problem persists. Any help will be appreciated.