It is extremely simple for people motivated to use your computer as a warez server to do so, if they are inclined. There are tons of groups that use IRC that scan blocks of ip addresses. When they find easy targets which your pc might have been, they run scripts which easily root your computer to set up ftp servers so they can place the warez material on your machine.
Also in these scripts, they setup a bot that joins their IRC channel and reports to them exactly what is going on with your machine. It is also very common for these scripts to erase system logs so you can't even check what had happened. When your pc is in the IRC channel it was made to, it can and would serve all music/videos/games/software that the hackers have placed on your machine using the ftp server the script placed on it. Now, your machine will be serving this stuff directly to anyone requesting it in the same IRC channel.
It sounds like something like this has happened to you.
Here are some preventative measures:
1) Make sure all administrator and regular user accounts on the machine (and all machines if you have more than one) use good, secure passwords.
2) Google for a rootkit scanner and let it scan your machine(s).
3) Run Malwarebytes on your machines to scan for any malware and let it remove.
4) If you don't file or print share across machines on your network, then disable netbios. Type services.msc in the start menu then hit enter. Use this screen to disable TCP/IP Netbios Helper service.
5) If you actually need to file share across machines, leave that service from 4 alone on all machines. In the TCP/IP properties page on each machine, that is where you want to disable NETBIOS then.
But now you won't be able to share.
To fix that, install the NetBeui protocol which can not be communicated with outside of your personal network. It is a non-routable protocol. For this reason alone, it is extremely secure and will not leave you vulnerable...while still allowing you to share across machines.
Follow instructions in the attachment. See below.
6) Invest in ZoneAlarm Extreme and use it to disable all network servers. Configure it so that only the programs you need to access the internet are allowed to. Put your network adapter in the internet zone as opposed to local zone. Then, only add your other computers into the local trusted zone. (I can help you lots more with all this if needed.)
7) Use this command from the command prompt to see all network connections, where they are connected to, and which program is doing it. If there are any programs you don't know about, get rid of them off the machine(s).
Attached is the files needed to setup the NetBEUI protocol on Windows machines. It includes a .txt file with instructions as well. You can trust it because it is from me and personally guaranteed to be authentic Microsoft files. It is within your rights and approved by Microsoft for you to use this, if you choose to.