A trio of flaws in the Universal Plug and Play (UPnP) service, which allows for automatic hardware detection in a network environment, can offer up total ownership of your machine to a malicious third party, Microsoft warns.
First up, and by far the most serious, an unchecked buffer in a component handling NOTIFY directives affecting Win 98 and ME, and XP, the most secure Windows ever produced. By sending a malicious NOTIFY directive, an attacker can run code in the UPnP service, which runs with System privileges on XP and at the OS level on 98 and ME. This would enable the attacker to own the system.
Next up, a denial of service vulnerability enabling an attacker to send a NOTIFY directive to a UPnP-capable machine, directing it to download what it needs from a particular port on a particular server. If the server were to echo the download requests, the target machine would enter an endless loop which could tie up its resources and from which the only escape is a re-boot.
Third, an attacker could use the DoS vulnerability to send a NOTIFY directive to a large number of machines and direct them to a third-party server, which would then be flooded with bogus requests, and possibly overwhelmed.
UPnP services are native on Win XP and ME (though not enabled by default on ME), and are only present on 98 if support for Internet connection sharing is enabled. However, the fact that you haven't enabled this service doesn't necessarily mean you're safe if you have an OEM box. It might well have been enabled at the factory; so if you're in doubt, be sure to install the correct patch (below).