'Microsoft email' is working like a Trojan

An email disguised as a message from Microsoft's security team contains a dangerous Trojan horse called Xombe.

Xombe, also known as Trojan.Xombe, Downloader-GJ and Troj/Dloader-L, was being distributed on Friday and poses as a critical update for Windows XP. When executed, it attempts to download a malicious backdoor component from the Web.

It appears to be an imitation of one of last year's most successful worms, the mass-mailed Swen, which also masqueraded as a security warning from Microsoft.

However, Xombe has yet to repeat the success of Swen. While the former failed to make the top 10 threats intercepted by email-security firm Messagelabs on Monday morning, Swen was at number two, with some 7,000 instances captured in the past 24 hours.

Ken Dunham, director of malicious code at security company iDefense, said that the success of Swen has encouraged virus writers to create emails and websites that appear official in order to fool more people into executing malicious code.

The email, which appears to have been sent from windowsupdate@microsoft.com, has the subject line "Windows XP Service Pack 1 (Express) - Critical Update" and directs users to execute the attachment, called winxp_sp1.exe, in order to fix some vulnerabilities in Internet Explorer, Outlook and Outlook Express.

Dunham said that once executed, the attachment downloads a file called msvchost.exe that alters the Windows Registry and opens certain ports in order to listen out for commands from a hacker.

Most antivirus companies have already updated their signatures, but users without up-to-date antivirus applications could be infected, helping the Trojan's author to take control of large numbers of PCs. Dunham said that once a "large army of zombie computers" has been built up, attackers could use them for more serious crimes such as ID theft and banking fraud.

Munir Kotadia writes for ZDNet UK