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Malware Found Hidden In Screensaver On Gnome-Look
AndGodSed writes "OMG! UBUNTU! Reports the following: 'Malware has been found hidden inside an innocuous 'waterfall' screensaver .deb file made available on popular artwork sharing site Gnome-Look.org. The .deb file installs a script with elevated privileges designed to perform a DDoS attack as well as keep itself updated via downloads. The dodgy screensaver in question has since been removed from gnome-look, and this incident was a very basic, if potentially successful, attempt.'" A similar report at Digitizor.com says that similar malware was also found in a theme called Ninja Black. For those affected, both sites also provide instruction on cleansing your system.
You're describing Microsoft Windows XP.
XP came with an automatic update function. A few years into XP's life, Windows Genuine Advantage was automatically rolled out in a service pack, and once installed it will degrade your computer if Microsoft decides you might be a pirate.
Your nightmare scenario is everyday reality for most people. Pleasant dreams.