All of the shortcut icons have changed...they now read "enter name of shortcut here".lnk
If I try to create a new shortcut, it will have the .lnk, if I try to rename the shortcut and remove the .lnk, the shortcut no longer works. Have I picked up a virus or spyware? All of my scans are clean. Any suggestions why this happened?

Are we talking about the desktop? All shortcuts have the extension .lnk.

Why would you want to change it?

As to the original question: are you saying all the file names have been replaced with "enter name of shortcut here".lnk?
Are the icons still as they were? Do the links still work?

The shortcuts on my desktop and my start menu all had .lnk added to them (even tho "lnk" is part of the shortcut, "lnk" didn't show as part of the name of the shortcut). The file names were not changed, except for the addition of .lnk (I used that as an example). While waiting for a reply, I restored to 2 days back and the .lnk was gone. So, this is new, not just something I never noticed before.
The shortcuts still worked with the .lnk extension added, but did not work when I tried to rename them to their previous state (without the .lnk added to the name). My main concern was that I may have picked up a virus or something else nasty.

You probably changed or had changed this setting via: start | Control Panel | Folder Options | View | Hide extensions for known file types