cyberknight,

If deleting the preferences folder & updating Java doesn't help, download AVGFree AV. Update it & then scan your computer.
AVG Anti-Virus Free Edition

Please let us know if AVG finds anything & if it does, whether the problem with options is fixed.

Were you downloading any files just before the problem started? If so, what type of files were they (wma, mp3 etc)? Do you normally scan downloaded files before opening them?