The most common blunder people make when the topic of a computer virus arises is to refer to a worm or Trojan horse as a virus. While the words Trojan, worm and virus are often used interchangeably, they are not exactly the same. Viruses, worms and Trojan Horses are all malicious programs that can cause damage to your computer, but there are differences among the three, and knowing those differences can help you to better protect your computer from their often damaging effects.
Virus:
A computer virus attaches itself to a program or file enabling it to spread from one computer to another, leaving infections as it travels. Like a human virus, a computer virus can range in severity: some may 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 actually 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.
Worm:
A worm is similar to a virus by 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 capability to travel without any human action. A worm takes advantage of file or information transport features on your system, which is what allows it to travel unaided. The biggest danger with a worm is its capability 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 capability 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 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.
Trojan Horse:
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.
Courtesy & More info: http://www.webopedia.com/DidYouKnow/Internet/2004/virus.asp
