This is a very serious problem. A virus writer could easily exploit this by sending emails with image embedded html. I am not finding much information on how the jpeg would be crafted to take advantage of this exploit, but I could theorize a worse case scenario where a spreading virus would actually infect other jpegs. Not a pretty picture.
JPG/JPEG Vulnerability
Authored by: jgaylord on Saturday, October 23, 2004
This vulnerability can affect any software that was built using the .NET framework. Be certain that you check with your vendor to patch any software that was build with the framework. Reply to This