Certainly seems like a case where rescuing the data with Knoppix while you still can and reformatting and starting over is a better choice than trying to "fix" the data. That's a common situation with NTFS. Less common with FAT, but then again I don't know your friend's or your skills or what all bad has happened to the disk. And it certainly could be a drive going bad as weel (in addition to the infection, not instead of). I have a few drives here that I could format and make look perfect, but in less than a month you would not be able to accurately read the files from them again (and even Spinrite can't help them).

My suggestion: recover all that your friend wants to save (see the resque fac for tips if needed). Repartition and reformat the drive, if it's woth saving at all, but either don't use it for critical data or make very sure that you or he have good backups. Decide in a few months if the drive is still stable and safe enough to depend on, if not erase it throughly and destroy it.