Sounds like you were phished or something. Since firefox keeps its bookmarks as an XML file, it should be a simple matter of finding the file (bookmarks.html) and then either putting it back in the right place, or backing up by copying.
Either that or they were already compromised.
Thanks for the info but I don't think that was the case as the box showed "default" user and asked for a name for that default. No other information. Will look for the bookmarks.