An unannounced Windows Update that was distributed amongst Windows 7 users yesterday caused panic amongst users. It appeared the update came from a compromised update server. Afterwards it became known that it was a test update from Microsoft.
The update that was marked as important was offered as an additional language update. The name and description of the update consisted of a random series of characters and non-working links. On the Microsoft Answers Forum users suspected that attackers had compromised Windows Update to distribute malicious updates. Twelve hours after the update appeared Microsoft finally brought some relief by stating that it was an unintentional test update and that it was removed.
An user that installed the update reported that his laptop no longer worked properly and that his Windows Explorer regularly crashed. He also reported that System Recovery didn't work and that that update couldn't be removed. In the end this appeared to be unrelated to the test update.
The fear amongst users wasn't unjustified, in the past the Flame malware was distributed by Windows Update on a local network.
