A few rules...no porn, no warez/keygen, dont download programs from file sharing networks/check extension of "mp3s downloaded", use firefox/opera.
In general, know what your downloading.
I have never used active anti virus protection or active spyware protection and have only been hit with a virus once (my fault--enable file sharing with everyone having full access on my win 98 box. it was one for maybe 2 hours and got hit with a nasty virus) and maybe a few pieces of spyware that slipped through (most likely from other people using comp). I run a free AV program every 6 months and spyware once a month. Both are clean 98% of the time.