For those who are using McAfee product, please do not allow your XP computer to download the latest virus definition. Although McAfee has mentioned that it has pulled the plug on the update, I believe some corporate server might have downloaded the package waiting to update computers once they plugged into the corporate network.
Updated: McAfee issued DAT 5959. Here is a workaround for affected PCs
This is really bad for McAfee. Now, containment exercise is going on in McAfee to reduce the impact. According to Engadget,
Apparently DAT update 5958 deletes the svchost.exe file, which then triggers a false-positive in McAfee itself and sets off a chain of uncontrolled restarts and loss of networking functionality.
McAfee did provide a statement to address this issue.
McAfee is aware that a number of customers have incurred a false positive error due to incorrect malware alerts on Wednesday, April 21. The problem occurs with the 5958 virus definition file (DAT) that was released on April 21 at 2.00 PM GMT+1 (6am Pacific Time).
Our initial investigation indicates that the error can result in moderate to significant performance issues on systems running Windows XP Service Pack 3.
The faulty update has been removed from McAfee download servers for corporate users, preventing any further impact on those customers. We are not aware of significant impact on consumer customers and believe we have effectively limited such occurrence.
McAfee teams are working with the highest priority to support impacted customers and plan to provide an update virus definition file shortly. McAfee apologizes for any inconvenience to our customers
It seems that this problem only affects corporate users with Windows XP SP 3. If you are one of them and have not updated the Virus Definition, I suggest you put a hold on it first.