I hope this helps you as much as IT has helped me. I am hoping though that more people who know what they are talking about could add their two cents here. I've been reading up on this would like to share.
WHAT IS THE DIFFERENCE BETWEEN A WORM, A VIRUS, AND A TROJAN?
The most common blunder when the topic of a computer virus arises is that people will often refer to a Worm or Trojan Horse as a Virus. While the words Trojan, worm, and virus are used interchangeably, they are not the same. Viruses, worms, and Trojan Horses are all malicious programs that can cause damage to your computer, but there are differences between the three, and knowing those differences can help you to better protect your computer from their often damaging effects.
A computer virus attaches itself to a program or file so it can spread from one computer to another, leaving infections as it travels. Much like human viruses, computer viruses can range in severity; some viruses cause only mildly annoying effects while others can damage your hardware, software, or files. Almost all viruses are attached to an executable file, which means the virus may exist on your computer but it cannot infect your computer unless you run or open the malicious program. It is important to note that a virus cannot be spread without a human action, (such as running an infected program) to keep it going. People continue the spread of a computer virus, mostly unknowingly, by sharing infecting files or sending e-mails with viruses as attachments in the e-mail.
A worm is similar to a virus by its design, and is considered to be a sub-class of a virus. Worms spread from computer to computer, but unlike a virus, it has the ability to travel without any help from a person. A worm takes advantage of file or information transport features on your system, which allows it to travel unaided. The biggest danger with a worm is its ability to replicate itself on your system, so rather than your computer sending out a single worm, it could send out hundreds or thousands of copies of itself, creating a huge devastating effect. One example would be for a worm to send a copy of itself to everyone listed in your e-mail address book. Then, the worm replicates and sends itself out to everyone listed in each of the receiver's address book, and the manifest continues on down the line. Due to the copying nature of a worm and its ability to travel across networks the end result in most cases is that the worm consumes too much system memory (or network bandwidth), causing Web servers, network servers, and individual computers to stop responding. In more recent worm attacks such as the much talked about .Blaster Worm., the worm has been designed to tunnel into your system and allow malicious users to control your computer remotely.
A Trojan Horse is full of as much trickery as the mythological Trojan Horse it was named after. The Trojan Horse, at first glance will appear to be useful software but will actually do damage once installed or run on your computer. Those on the receiving end of a Trojan Horse are usually tricked into opening them because they appear to be receiving legitimate software or files from a legitimate source. When a Trojan is activated on your computer, the results can vary. Some Trojans are designed to be more annoying than malicious (like changing your desktop, adding silly active desktop icons) or they can cause serious damage by deleting files and destroying information on your system. Trojans are also known to create a backdoor on your computer that gives malicious users access to your system, possibly allowing confidential or personal information to be compromised. Unlike viruses and worms, Trojans do not reproduce by infecting other files nor do they self-replicate.
Combating Viruses, Worms and Trojan Horses
The first steps to protecting your computer are to ensure your operating system (OS) is up-to-date. This is essential if you are running a Microsoft Windows OS. Secondly, you should have anti-virus software installed on your system and ensure you download updates frequently to ensure your software has the latest fixes for new viruses, worms, and Trojan Horses. Additionally you want to make sure your anti-virus program has the ability to scan e-mail and files as they are downloaded from the Internet. This will help prevent malicious programs from even reaching your computer. If this isn't enough protection, then you may want to consider installing a firewall as well.
A firewall is a system which prevents unauthorized use and access to your computer. A firewall can be either hardware or software. Hardware firewalls provide a strong degree of protection from most forms of attack coming from the outside world and can be purchased as a stand-alone product or in broadband routers. Unfortunately, when battling viruses, worms and Trojans, a hardware firewall may be less effective than a software firewall, as it could possibly ignore embedded worms in out going e-mails and see this as regular network traffic. For individual home users, the most popular firewall choice is a software firewall. A good software firewall will protect your computer from outside attempts to control or gain access your computer, and usually provides additional protection against the most common Trojan programs or e-mail worms. The downside to software firewalls is that they will only protect the computer they are installed on, not a network.
It is important to remember that on its own a firewall is not going to rid you of your computer virus problems, but when used in conjunction with regular operating system updates and a good anti-virus scanning software, it will add some extra security and protection for your computer or network.