I’ve read at least two reports in the last five minutes on the seriousness of a new security problem that affects all versions of Windows XP, as well as 2000 and NT4. More details here. When MSBlast hit it caused chaos, but we were lucky – it wasn’t destructive. Somebody’s undoubtedly already exploiting this new vulnerability and they may not be as ‘nice’, so get patched up via Windows Update, or you can download it directly here.
Incidentally, I keep reading articles/posts recommending against any kind of auto-updating or use of Windows Update due to ‘the patch might break things – you should give it time to make sure’. Ignore this. This happened with a very early service pack for Windows NT. It was a long time ago, and hasn’t happened since. Even if it did, you’re almost certainly better off applying the patch than having Joe Hacker break into your PC and low-level format the hard drive.