Paul has discovered a vulnerability in Internet Explorer, which can be exploited by malicious people to conduct cross-site scripting attacks and compromise a user's system.

The vulnerability is caused due to an error in the DHTML Edit ActiveX control when handling the "execScript()" function in certain situations. This can be exploited to execute arbitrary script code in a user's browser session in context of an arbitrary site.

Secunia has constructed a test, which can be used to check if your browser is affected by this issue:
http://secunia.com/internet_explorer_cross-site_scripting_vulnerability_test/

This can further be exploited to execute arbitrary code by running malicious code in the "Local Machine" zone.

The vulnerability has been confirmed on a fully patched system with Internet Explorer 6.0 and Microsoft Windows XP SP1/SP2.

Solution
Microsoft has released updates.
Further details available to Secunia VIM customers

Provided and/or discovered by
Initially discovered by Liu Die Yu
Further research and PoC by Paul (from greyhats)

Changelog
Further details available to Secunia VIM customers

Original Advisory
MS05-013 (KB891781):
http://www.microsoft.com/technet/security/bulletin/ms05-013.mspx

Other references
Further details available to Secunia VIM customers

Deep Links
Links available to Secunia VIM customers