What is a virus?
A computer virus, according to Webster's Collegiate Dictionary, is "a computer program usually hidden within another seemingly innocuous program that produces copies of itself and inserts them into other programs or files, and that usually performs a malicious action (such as destroying data)". Two categories of viruses, macro viruses and worms, are especially common today. Computer viruses are never naturally occurring; they are always man-made. Once created and released, however, their spread is not directly under human control. 

Macro viruses
A macro is a piece of code that can be embedded in a data file. Some word processors (e.g., Microsoft Word) and spreadsheet programs (e.g., Microsoft Excel) allow you to attach macros to the documents they create. In this way, documents can control and customize the behavior of the programs that created them, or even extend the capabilities of the program. For example, a macro attached to a Microsoft Word document might be executed every time you save the document and cause its text to be run through an external spell checking program.

A macro virus is a virus that exists as a macro attached to a data file. In most respects, macro viruses are like all other viruses. The main difference is that they are attached to data files (i.e., documents) rather than executable programs. Many people do not think that viruses can reside on simple document files, but any application which supports document-bound macros that automatically execute is a potential haven for macro viruses. By the end of the last century, documents became more widely shared than diskettes, and document-based viruses were more prevalent than any other type of virus. It seems highly likely that this will be a continuing trend. 

Worms
Worms are very similar to viruses in that they are computer programs that replicate functional copies of themselves (usually to other computer systems via network connections) and often, but not always, contain some functionality that will interfere with the normal use of a computer or a program. The difference is that unlike viruses, worms exist as separate entities; they do not attach themselves to other files or programs. Because of their similarity to viruses, worms are often also referred to as viruses. 

What is a Trojan horse?
Named after the wooden horse the Greeks used to infiltrate Troy, a Trojan horse is a program that does something undocumented which the programmer intended, but that the user would not approve of if he or she knew about it. According to some people, a virus is a particular case of a Trojan horse, namely one which is able to spread to other programs (i.e., it turns them into Trojans too). According to others, a virus that does not do any deliberate damage (other than merely replicating) is not a Trojan. Finally, despite the definitions, many people use the term "Trojan" to refer only to a non-replicating malicious program. 

For more information on viruses, see the (virus-L/comp.virus FAQ).

Most of the preceding suppliers have security suites containing an AV program, personal firewall, anti-spam, etc.  In addition there are some other AV programs, free for personal use:

A review of some of the preceding (click here)

Several suppliers offer free on-line virus scanning:

It has been reported that some sites which offer free virus scanning install malware/spyware on your system.  It is prudent to limit on-line virus scanning to name brand providers.

Since new viruses are released into the wild daily, it is essential to update your AV program frequently.  Many users update the virus definitions on their PCs when they turn their machines on each day; some even update later in the day.  Most AV programs have a provision to update definitions automatically.

Bottom Line
Have an AV program installed and running on your system.   Keep it updated.

Following are some sites where you can check to see if something is a hoax or not: