"c:\~"

Not a file I've ever come across before. Have you tried running a virus scanner on your system? Try soft deleting the file (back it up) and see if that has an adverse effect on anything.

I came across this before, so knew what to Google for:

The file appearing on your desktop with the filename ~, commonly known as a tilde, is a backup of your Windows Address Book. It is appearing as a result of the April 2003 Cumulative Patch for Outlook Express (330994). The patch is installed for Outlook Express 5.5 or 6 in response to a vulnerability that could allow an attacker to run code of the attacker’s choice on a user’s machine. To exploit the vulnerability, an attacker would have to be able to cause Windows to open a specially constructed MHTML URL, either on a web site or included in an HTML email message.

Unfortunately, there is a bug in the patch.Whenever you make a change in your Windows Address Book file (*.wab file), Windows makes a backup of this file. Generally this backup is called username.wa~ , however after the patch is installed the backup gets renamed to just ~ instead and saved in the directory where you start your Outlook Express. Most of the time, people start Outlook Express from a shortcut on their desktop, so the backup file gets placed there. This is how the tilde (~) file arrives on your desktop.

You can delete the file. Each time you make a change to your address book, this file will reappear. you can uninstall the patch, this will fix the tilde (~) file from appearing, however you will not be protected from this security vulnerability either.

Excellent answer Rob.

Thanks guys!

Glad to know it isn't one of those mail sending virus things