Here are some of the free utilities I've either used or read about recently. Note: I can't promise all these are spyware or virus-free, so make sure you check them over properly before use.
Compression/Extraction Utilities:

PECompact2 - Tool for compressing executable files (can shave up to 60% off their size)

IZarc - Free alternative to Winzip, with extra tricks
TugZip - Ditto

Security:

Microsoft Baseline Security Analyzer - This free utility helps you identify and fix security holes on Windows 2000 or XP machines (either the local machine or others connected to the same network). To run a check on other network PCs you may need to make a few tweaks to those PCs - eg. allowing file and print sharing through any firewall - and you need to be logged into the network as a network admin (or at least someone with permission to access the remote PC).

IIS Lockdown Tool - Turns off some potentially hacker-friendly IIS services

Ethereal - Network protocol analyser.

Zone Alarm - Zonelabs offer a reasonably good firewall which is free for home use. It's certainly better than microsoft's effort. Having to download and install the full program every update becomes a bind though.

Process Explorer from www.sysinternals.com lets you see which DLLs, resources etc are being used by a running process. Useful if you're suspiscious about one.

Remove Hidden Data - Office XP/2003. Your files may contain more information than you intended...

Site Digger 2.0 - Hackers use Google to find security holes. "SiteDigger 2.0 searches Google’s cache to look for vulnerabilities, errors, configuration issues, proprietary information, and interesting security nuggets on web sites."
Forewarned is forearmed.

Multimedia:

Movie Maker 2.1 - Win XP SP2 only. Much improved version of this freebie tool.

Producer 2 - Powerful add-in for Powerpoint 2002/3. This works as a standalone program allowing you to synchronise audio, video and powerpoint files.

PowerBullet - A free way to produce simple Flash animations.

KoolPlaya - Very compact media player. Installation not required.
MPlayer - Music and video player.

Make PDFs without paying for Acrobat Distiller

CutePDF - This one does the job for me. Requires prior installation of a PS2PDF program (the free 'Ghostscript' is recommended by the site, with a direct link to the download).

PDF Creator - Not tried this. It was recommended by Personal Computer World mag.

Encryption/Secure Storage

Cryptainer LE - Create an encrypted container for sensitive data. You can also password protect program use by installing programs within this container.

Securengine - Encryption/Decryption. Allows you to hide data inside other files.

Antivirus

Avast antivirus - Supposed to be good

Others:

Sysprep - Tool for speeding up the installation of Windows XP on multiple machines

PC Inspector - File recovery program.

Microsoft SMS Sender - Supposed to allow you to send SMS messages from your PC via a connected mobile phone. If I get round to trying this out, I'll let you know if it's any good.

CDBurnerXP - Free CD Burner, natch. Supposed to be decent, for a freebie. No spyware either.

Thunderbird - Superior email client from Mozilla. Handles all the usuals, plus RSS (blog) feeds and includes spam filtering.

Open Office - By all accounts this is a very good alternative to Microsoft Office, given the price!

Word Press - Free publishing platform for blogs (your own server that supports PHP and MySQL is required).


Quik-fix from www.pivx.com can crank up the security in IE, but it isn't free.

RegistryProt can alert you to attempts to rewrite your registry. This is free, but Trend Micro software may report it as Spyware.