Spyware, a special breed of virus that spy on how you use your computer. Lower strength spyware report web sites you visit, items you buy and software you use. High strength spyware record your keyboard stroke when you visit your bank.
There is no free lunch. When you found free software from the internet, you better ask yourself if you really need that and what exactly behind the scene.
There are application with good intension, such as weather bug, telling you about weather around you. However, loosen security of those application allow hacker to implant spyware onto your computer.
Limewire is another software widely used by general public but allow hacker plants viruses and spyware onto victim's computer.
Spyware also comes from cookies.