I am currently at a friends house, he asked me to sort out this problem for him. In tools, folder options, on the view tab. Hidden folders shows, but the options to show or hide hidden files are no longer there. he had found and got rid of a virus this morning, and believes it must have been responsible. Searched everywhere, but couldn't solve it. Could create a hidden file and hide it, but couldn't view it again.
in desperation I did a system restore, and the problem was solved, the options to show or hide hidden files are back.