Brief overview of Password Managers (I'd really love criticism if I'm wrong).
blog.danielfischer.com
blog.danielfischer.com
One thing about using a password manager is that it needs to be easily accessible or you will fail to enter all your assets in it, and it becomes less valuable. That's why I use Keypass & Dropbox which makes my passwords available on my Win7 workstation, my Android phone and my iBook.
If you store a key on that same compromised Windows machine you are still screwed. End of story. Even if you store it on removable media they just grab it & your password at the time of access.
[1]: HMAC-Based One-time Password
[2]: Time-based One-time Password
Both Lastpass and Passpack currently support Yubikeys.