Malware, "malicious software", is software developed for the purpose of doing harm.

Malware can be classified based on how they get executed, how they spread, and/or what they do. The classification is not perfect, however, in the sense that the groups often overlap and the difference is often not obvious.

Classes of malicious software

Viruses
The first type of malware to evolve was the computer virus. Viruses work and spread (within the infected system) by attaching themselves to other pieces of software (or in the case of macro viruses, to documents), such that during the execution of the program the viral code is executed. Viruses spread across computers when the software or document they attached themselves to is transferred from one computer to the other.

Computer worms are similar to viruses but are stand-alone software and thus do not require other pieces of software to attach themselves to. They do modify their host operating system, however, at least to the extent that they are started as part of the boot process. Worms spread, either by exploiting some vulnerability of the target system, or by using some kind of social engineering to trick users into executing them.

Trojan horses are similar to viruses in that they get executed by being part of an otherwise useful piece of software. However, Trojan horses are attached to the host software manually, they cannot infect other pieces of software the way viruses can, nor can they replicate themselves. To spread, Trojan horses rely on the useful features of the host software, which trick users to install them. One of the most insidious types of Trojan horse is a program that claims to rid your computer of viruses but instead introduces viruses onto your computer.

A Backdoor is a piece of software that allows access to the computer system, bypassing the normal authentication procedures. Based on how they work and spread there are two groups of backdoors. The first group works much like a Trojan, i.e., they are manually inserted into another piece of software, executed via their host software and spread by their host software being installed. The second group works more like a worm in that they get executed as part of the boot process and are usually spread by worms carrying them as their payload.

Spyware is a piece of software that collects and sends information (such as browsing patterns in the more benign case or credit card numbers in more serious ones) on users. They usually work and spread like Trojan horses. The category of spyware is sometimes taken to include adware of the less-forthcoming sort.

An Exploit is a piece of software that attacks a particular security vulnerability. Exploits are not necessarily malicious in intent — they are often devised by security researchers as a way of demonstrating that a vulnerability exists. However, they are a common component of malicious programs such as network worms.

A Rootkit is software inserted onto a computer system after an attacker has gained control of the system. Rootkits often include functions to hide the traces of the attack, as by deleting log entries or cloaking the attacker's processes. Rootkits may also include backdoors, allowing the attacker to easily regain access later; or exploit software to attack other systems.

Phoney or Hoax Viruses
There are many instances where hoax virus warning messages have been sent which suggest that the recipient may have a particular virus, together with helpful instructions about how to confirm and eliminate the virus. These messages almost invariably tell you to look for a particular file and if it is present, delete it. In most cases the file which they mention is a Windows system file which if deleted, will cause serious running problems. If in doubt, run an internet search on Google for the filename, and you will almost cetainly find information about it, and any recent scam.

Prevention --> Spam Blockers

How to stop Malware
As with all unwanted internet files and applications, there are three essential actions to be considered:
1. Malware Scanning to detect whether any file has secreted itself on your drives or in your registry
2. Malware Removal. This involves software that can identify and remove the malware
3. Malware Prevention. It is essential that you block any further invasion once you have removed any existing malware files

Malware (ref: Wikipedia, the free encyclopedia)