This hole allows users with restricted access to escalate their privileges to system level – This is possible on all 32bit Windows Platforms: Windows 3.1 to Windows 7. (and upcoming win7 SP1 too)
The vulnerability is going to have severe impact on a business/office user, on the other hand, a home user might get malware/viruses/worms more easily and readily.
The root cause is Virtual DOS Machine (VDM) introduced to support 16-bit applications for 8086 Mode (VM86) in 80386 processors and other stuff like BIOS calls.
A Typical hack implementation will allow an unprivileged 16-bit program to manipulate the kernel stack of each process via a number of tricks. This can enable attackers to execute code at system privilege level.
Its said that Microsoft was already informed of the hole in mid 2009.
For windows 2003: Start group policy editor and enable the “Prevent access to 16-bit applications” option in the Computer Configuration\Administrative Templates\Windows Components\Application Compatibility section. The settings won’t interfere with 16-bit applications compatibility, but will make it secure for sure.
Windows 3.1, 95, 98, ME, 2000, XP, Vista, Windows 7:
Users will have to create a Registry Key under:
with a D-Word value of VDMDissallowed = 1.
Under Windows XP, to prevent the system from being vulnerable to the exploit, users can place the following text:
Windows Registry Editor Version 5.00 [HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\AppCompat] "VDMDisallowed"=dword:00000001
into a file called vdmdisallow.reg and double click the file. Windows will then automatically import the key.