This is a primitive virus, which simply infects programs by overwriting (and destroying) them, but with an interesting twist.
The original virus is LZEXE packed, but this is not simply a method of hiding the first generation sample - the virus maintains the packing in all succeeding generations.
Disinfection & Removal
Allow F-Secure Anti-Virus to disinfect the relevant files.
For more general information on disinfection, please see Removal Instructions.