Is desktop.ini file a virus?

   Desktop.ini is a Windows XP system file. It stores information about customized folders.
Anyone who has customized a display of any folder, perhaps by changing the icon or the way something is displayed, may have enabled Windows to save those settings in a "desktop.ini" file.
However, viruses have been known to hide there, even change their name to Desktop.Ini.
The desktop.ini file is a hidden file used to customize and adjust settings for the Windows folders that contain the file.

Can it be deleted?

This file can be safely deleted from any directory.  However, because this file may have settings associated with the folder that it contains and deleting this file will change these settings back to default. For example, if the folder containing this file has a different icon and you delete this file the default folder icon will be re-enabled.

Is this file a virus?

No. By default this file is not a virus. However, there have been a few known viruses that exploit the capabilities of the desktop.ini file. So it can be infected or if created by another program may have attributes that may compromise your computer. If you're concerned about this file being a virus, scan the file with an antivirus program.