The thing is, if someone is able to get inside your machine, they don't have to worry about encryption at all. They'll just attack at the point where the data is unencrypted. And it has to be at some point, for you to be able to type and/or read it. Once you have a compromised machine, all bets are off.

But yes, an account with an authenticator is still much more secure than one without.

Off topic now, but I suspect that by the time windows 9 comes out windows will run each program in it's own virtual environment with it's own view of the operating system and programs, with shared data areas that you can't run programs from, so that no matter what bugs there are in your web browser and no matter what it downloads ands runs, it can damage what it likes but it won't affect the environment that wow.exe runs in when it runs.

In addition I suspect that in a few years the hardware will only physically load an operating system that is digitally signed, and that operating system will only load drivers and privileged programs that are similarly digitally signed and everything else will run in the virtual environments as above where the programs can't interact with each others's view of the world.

Windows UAC, and 64 bit windows requiring signed drivers goes a long way towards that, but it's not there yet... It will seem a pain, but it is really the only way that this problem will be solved.

Interesting idea actually. If you've got a high enough version of Windows 7, you can run WoW in an XP virtual machine. As you wouldn't use that VM for anything other than playing WoW, it should be pretty secure. The way Windows 7 handles XP VM's is very nice as well - you'd never even know it was running in one.

Not sure what the performance impacts would be though and you'd probably need to update your drivers twice (i.e. once for Win 7 and once for the XP VM).

Or do all your web browsing from a virtual machine and throw it away when you finish the session....

VM's are definately going to change the way we do a lot of things. At work, most of our test kit has been virtualised for a while now. Our automated test systems now request a fresh VM, install the code, run the tests, then throw it away. Much better than having loads of hardware sitting around doing nothing most of the time.

My first post on the subject wasn't really talking about virtual machines as much as a virtual environment for each program where it sees it's own view of the file system and is completely isolated from everything else. A VM can do this, but there are simpler ways too

You will in the future get a Biometric kit to log in to anything

Eye Scanner
DNA scanner
Palm and finger print scanner

and for the ones loving alien abduction movies... a probe