[pauldodman]

I was speaking to Clook about it - they found this:

How it's done
This is a sophisticated operation, and the infection cycle is involved, but basically, the hacker(s) are setting up innocent looking sites (or using previously hacked sites where the owner is usually unaware of being compromised) and loading them with expensive hacking tools like Mpack. When someone visits that site, their browser is detected and attacked (browsers affected are IE, firefox and opera). The visitor is unaware that they may have a keylogger that sends the persons passwords ect to the hacker(s) and moves on. If the innocent visitor has an ftp or root password for any internet sites, the hackers use a program that goes to the persons site(s) and instantly adds the hidden iframe to every index type page. This is why there seems to be no indication that the site has been compromised, as the hackers already have the ftp or root passwords to login. And since they have at least your account ftp pass, whatever permissions your folders and files are set to make no differ ence.
After they put the iframe code into that person's pages, anyone visiting that site will be redirected to the hackers infection site, where the person's computer will be injected and infected. The hackers are depending on site owners not knowing their sites have been hacked so that the number of hacked sites will grow (as they have starting in Italy) into the tens of thousands... Please don't think you can depend solely on your antivirus software to protect your computer. It more than likely won't help you. For $1000 dollars, the russian hacking bulletin boards are offering Mpack with 1 year support and a GUARANTEE that virus programs will not catch the keyloggers. SO, keep your virus program updated, but don't depend on it completely!

This way this hack is spreading fastly from one computer to another broadcasting the passwords to hackers.During my research in this, I even found some of the password files collected by the hack on some of the hacked server, where they pass this password file to thier tool to add the code. In some cases Google bots picks this files and you can even find the login details of FTP accounts and Server root login details in google.