You have been infected with the Flashback Trojan.
The ‘Flashback Trojan’:
A version of an existing Trojan Horse posing as a legitimate Flash Player installer (named “Flashback.A” by a security firm) is designed to disable updates to the default Mac OS X anti-malware protection system, potentially leaving the system open to the manual installation of other malware without any system warnings. The most recent versions bypass any user action and automatically installs itself after an affected website is visited.
(Adobe is aware of malware posing as its Flash Player and warns users to ignore any updates that didn't originate on its own servers. "Do not download Flash Player from a site other than adobe.com," said David Lenoe, Adobe's product security program manager, in an entry on Adobe Product Security Incident Response Team's PSIRT blog. "This goes for any piece of software (Reader, Windows Media Player, QuickTime, etc). If you get a notice to update, it's not a bad idea to go directly to the site of the software vendor and download the update directly from the source. If the download is from an unfamiliar URL or an IP address, you should be suspicious.")
Flashback Trojan - Prevention of infection:
The Flashback Trojan does not affect PPC (non-Intel) Macs, nor has it been noted to affect users running Tiger OS 10.4.11 or Leopard OS 10.5.8.
Last, but by no means least, using Open DNS is the simplest way of preventing infection in the first place. Open DNS also protects against phishing attacks, re-directs, speeds up your internet connection, and works for all users of OS X from Tiger upwards:
How to get it:
Flashback Trojan - Detection and Removal
Users with Intel Macs running Snow Leopard OS 10.6 or Lion OS 10.7 should ensure that they have downloaded all the recent Java updates from Apple, which are designed to prevent infection and also remove any infection already present.
New Macs running Lion do not have either Flash Player nor Java installed. If you running Lion and have not already downloaded and installed Java, you should download the ‘Flashback malware removal tool’ from Apple: http://support.apple.com/kb/HT5246 (356KB) which includes the same code as the Java update that plugged a security hole which allowed the malware to automatically install itself without admin authorization.
You can also use this to check whether you have been infected (for Intel Macs only) and remove it if required:
Flashback Trojan - Detection, and how to remove (with caution) if you are running other browsers than Safari: