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The version of the Microsoft virtual machine (Microsoft VM) that is included with Microsoft Internet Explorer 4.x and Internet Explorer 5 and 5.01 contains a security vulnerability that could enable the operator of a malicious Web site to write a Java applet that could read, but not change, delete, or add, files on a visiting user's computer or read Web content from inside an intranet if the malicious site was visited by a computer from within that intranet. The malicious user would need to know the exact path and file name of the files he or she wanted to read.
This problem is due to the way the default system class path is set when the Microsoft VM is installed. Depending on the version of Internet Explorer installed, this can enable untrusted code to read files under the root directory (typically "C:\") or the desktop directory (typically %systemroot%\Profiles\User name\Desktop).
Microsoft has confirmed that this is a problem in the Microsoft products that are listed at the beginning of this article. This problem was first corrected in Windows 2000 Service Pack 1. This problem was also corrected in Microsoft VM build 3802 or later.
For more information, please see the following Microsoft Security Bulletin: