Compromised system or email address spoofed for spam?

[GuitarG]

In the last week I have begun getting literally thousand of 'undeliverable message' emails on one of my machines. In looking at the header information it appears that the email account is being used to send out pornographic spam. The system has had up to date virus software and definitions, all current XP security patches and a firewall running all the time. When doing a virus scan the machine shows no infection and when running a spyware search I am finding very few bugs. When monitoring the machine I am showing no out of the ordinary activity, and there are no unusual services or apps running.
Is this a characteristic of a virus that has possibly disabled the virus software or is the email account possibly being spoofed by a spammer?
Thanks in advance for your assistance

 

[jrbarnett]

I think its more likely that the "From" field has been spoofed, and the recipients are using software to send it back to the "Sender" who had nothing to do with it.

Unfortunately, many non technical people don't realise how easy it is to fake such settings and thus how pointless sending Undeliverable messages back to the fake from address.

John