Full Article is here: http://blogs.msdn.com/powershell/archive/2006/08/03/687838.aspx
A “PowerShell Worm” has recently been reported by several antivirus companies and some news organizations. There has been some confusion and concern around the classification of this malicious script as a worm as well as questions about the risk.
It is important to note that the PowerShell Worm will not work and cannot infect Windows PowerShell in its default configuration.
This is a proof-of-concept virus whose “Worm” replication mode is just a simple file copy and could have been implemented in any language which supports copying files. The fact that the worm is written in PowerShell rather than another scripting language or even as an executable has actually made it even harder for this virus to spread since the additional security features around PowerShell scripts result in many additional steps for the user to perform before an infection can take place.