The virus is on a PC with FTP access to your website. The virus steals FTP login credentials, sends them to a server which connects to the website with valid credentials, downloads either all of the files or only a select few, infects them then uploads them to the server.
For Wordpress blogs you should also scan all .php files for a string that looks like:
PHP Code:
<?php eval(base64_decode(...
and then a long list of characters. Typically when the hackers obtain access to a website, they put this code in some .php files. This gives them remote access to your website - yes, they can then re-infect the website without ever logging back in.
If you have all of the files saved on your PC, you can check them for infectious code but also please check all the files on your server. Sometimes they'll inject the above code I showed into existing .php files and sometimes they'll also create bogus files with nothing but their malscript in it.
Quite often these stand alone files are in an images folder and sometimes they're named gifimg.php. Look in all images folders but also check all .php files as they do inject it either at the very top or the very bottom of a file.
As far as the virus goes, it knows how to evade detection of the currently installed anti-virus program. So you may have to install something different. I've had good success recommending Avast, F-Prot or Kaspersky. However, remember, the virus knows how to evade detection of the currently installed anti-virus so if you already have one of these installed, you'll have to install one of the other ones. Kaspersky doesn't like other anti-virus programs installed so you may have to uninstall your current anti-virus program if you're going to use Kasperksy.
The virus works because quite possibly you're using an FTP program that stores the username and password combinations in a plain text file. This is quite common with the free versions. The following all store the login credentials in a plain text (unencrypted) format:
1.CoffeeCup Direct FTP
2.TransSoft FTP Control 4
3.Core FTP
4.GlobalScape CuteFTP
5.Far Manager (with FTP plugin)
6.FileZilla
7.FlashFXP
8.SmartFTP
9.FTP Navigator
10.Total Commander
I use WS_FTP by Ipswitch because it encrypts the login credentials so they can't be stolen - so easily.
Post back here if you have further questions or updates - please.