The spyware created by Brilliant Digital was tested a while ago. At the time, it was detected by Firewall programs such as ZoneAlarm but apparently they've found a workaround. Many times, they stated that the full time "service" would be started at the end of April.

For tech savy people like the ones here, this won't be much of a problem, there will probably be a way to shut down the spyware but for the ordinary KaZaa user, he might never know of its existence.

Here are a few links on the subject.

Broadband News Stealth P2P Network Hides Inside Kazaa

Spyware, In a Galaxy Near You

Kazaa Download Offers Unexpected Feature

Kazaa subscription option in the works