Important! Wired News: Browser Hijackers Ruining Lives
The moral of this story is that you should ALWAYS keep your anti-virus software up to date, as well as apply ALL critical patches from Microsoft, AND install a good anti-spyware agent, such as Ad-Aware. You also need either a software or hardware firewall to be fully protected.
If your computer gets infected with a trojan, virus, worm, spyware, or hacker intrusion that puts porn or other illegal materials on your machine, YOU could be held responsible! I have also heard of many cases where a machine was hijacked and used to send spam to millions of people, resulting in the user of that machine losing internet access when the ISP cut them off!
Please, apply patches weekly or more often! Install an Antivirus, anti-spyware, and firewall and keep them all up-to-date.
Norton Internet Security is a good package that includes a software firewall, anti-virus package, and a somewhat useful spam filter - not sure how good. When you add this to ad-aware (registered), you have a good defense for your computer for under $100.