What is it?
The term "spyware" is in most cases synonomous with the terms "adware" and "scumware." One definition of spyware is "any software which employ's a user's Internet connection in the background without their knowledge or explicit permission." They may be picked up through e-mails, surfing websites and downloading software, especially "freeware" and "shareware" offerings.
What can it do to my computer?
Keep in mind that spyware programs are executable programs running in the background. As such, they are capable of doing anything any other program can do that doesn't require user intervention. For instance, many of them silently monitor your web surfing habits and report back to central servers. Others display popup ads on your desktop or in your web pages as banners. The more dangerous types of spyware are actually trojans, which allow others to remotely access infected computers and take control of them. In short, at best spyware is a nuisance, in its worst form it is a terrible security risk.
What can I do? How do I find out if I have spyware installed?
One of the things you can do is download and run a spyware detection and removal tool, such as Ad-aware by LavaSoft. Such programs have become pretty good at locating and removing spyware, adware and scumware. Secondly, be wary of downloading freeware and shareware. Many of those programs are supported in their "free" modes through the use of advertising, which frequently involves some form of spyware.
Here are some of the more common forms of spyware currently "loose" on the Internet:
Marketed as a program to add graphical skins to IE toolbars, it also adds its own toolbar. It monitors all URLs you visit to add link buttons to its toolbar dependent on the site. It will also add toolbars to Microsoft Outlook and provide the ability to add graphics and animations to e-mails sent within Outlook which could cause severe problems and security risks.
Gator, Gator/A, Gator/GAIN, Gator/Trickler, Gator/PDP
Gator is a software product that can automatically fill in passwords and other form elements on Web pages. But its main purpose is to load an advertising spyware module called OfferCompanion, which displays pop-up ads when visiting some Websites. Gator boasts that since it's software is always running, it can spam users with "Special Offers" and other ads anywhere they go—even competitors' sites—with remarkable targeting capabilities, since it can spy on what sites the user is visiting.
Xupiter consists of an Internet Explorer toolbar containing link buttons to one of Xupiter's search engines and a task run at Windows startup which downloads updates to the software and may launch pop-ups. It also contains functionality to hijack your home page and address bar searches, and add Xupiter links to your bookmarks.