FYI, for anyone else that has these security problems I found that the template's index.php file had been hacked along with the login.php files. I compared with the original to find the differences. After replacing those files I removed the admin user and installed a security plugin.
Both files contained <script language=JavaScript>function....
I wonder if you did a global search for this string in all the PHP files how many times this would turn up?
Turns out it showed up in other templates login.php and administrator/index3.php files?