Yet another variant of Code Red worm has come
out that not only exploits you but backdoors
your webserver. It creates a file called root.exe
which is really a copy of your cmd.exe file. This
will allow a attacker to execute commands on your 
machine with complete control. This can also allow
people to commit large scale ddos attacks with ease.

It is VERY IMPORTANT to patch if you haven't already.
Please visit the links below for some further information.

theregister.co.uk
Incidents.org
Code Red Request log examples(Look at attack signatures)