Obviously, you are supposed to assume that your actual gameplay has no direct correlation to the plot, aside from moving characters place to place. Damage is not retained.
Interestingly enough, however. . . in the (fairly bad) novel series by S.D. Perry, "The T-Virus causes massive damage when it is initially released, but after a very short period burns itself out, making further infection impossible."
So there's a plausible excuse if it's ruining your OHMYGAWDIMMERSION
It is also revealed in a File that is read in REvelations that: '...these herbs also have anti-viral properties...', referring to the herbs used to heal. So you can just assume that if you heal the wound, you also kill the virus.