This virus is written by the same authors as the Shake, MG and DIR viruses. It uses an unique method to infect files, as it does not change the files, but only the directory entries.
DIR-II is a full stealth virus, but F-Secure anti-virus products will detect it from memory and will advice you to boot from a clean diskette. If you analyze your hard drive after booting clean, you will see that all infected executables are cross-linked. Don't try to correct this.
DIR-II can be disinfected by renaming all executables to non-executable extensions while the virus is active, then booting clean and renaming them back. After this, run chkdsk.
Disinfection & Removal
Description Created: Mikko Hypponen, F-Secure