Microsoft urged users to run a complete system scan on its new Windows Live Safety Center to detect and delete the code. Both proof-of-concept code and an exploit are in circulation. The exploit can compromise PCs running IE on a host of the company’s operating systems, including Windows 98, Windows Me, Windows 2000, and Windows XP.

The exploit code takes advantage of a flaw in the way Windows handles certain graphics files. Microsoft provided a patch in November with security bulletin MS05-053 and warned that the vulnerability could create an opening for spyware and Trojan horse attacks.

In an advisory warning to users, Microsoft repeated its promise that it would take the appropriate action to help protect our customers. This may include providing a security update through our monthly release process or providing an out-of-cycle security update, depending on customer needs.

The advisory includes several workarounds to deflect attacks, including disabling Active scripting in Internet Explorer by choosing Tools/Internet Options, clicking the Security tab, clicking on the Custom Level button, scrolling to the Scripting section, and selecting the Disable radio button next to Active scripting.

Microsoft is aware that detailed exploit code has been published on the Internet for the vulnerability that is addressed by Microsoft security bulletin MS05-053, said a company statement. Initial investigation of this exploit code has verified that successful exploitation could lead to a denial-of-service attack…not remote code execution.

Microsoft has urged all customers to apply the most recent security updates to protect their systems.