A few days ago, an exploit used for highly targeted attacks was published here: CVE-2010-2568 Lnk shortcut. As the blog post, and other posts, state, this is caused by Windows Control Panel's shortcut image display routine. The original blog post shows a stack trace of the exploit results, which also serves to explain the vulnerability.
The nature of the vulnerability is pretty clear. But out of curiosity we did some reverse engineering and here is what we have found. The bug itself is a design flaw as stated by many people and it's very straightforward to locate the point where it happens. The vulnerable file is shell32.dll and the vulnerable routines are Control Panel-related. We loaded the binary on a disassembler and found that the Control Panel file-related routines start with a “CPL_” prefix.
Drawing 1 shows the relations between CPL initialization routines and data flow. The red “LoadLibraryW” API is the vulnerable one.
Drawing 1: The flow of the related routines and data
The icon extraction routine calls “CPL_FindCPLInfo” to find the icon information of the target file. The “CPL_FindCPLInfo” routine is basically a wrapper around all CPL-related routines. The loading and initialization of the CPL module is performed before getting any information out of it. One of the initialization routines, “_LoadCPLModule”, calls the “LoadLibraryW” API to load the target CPL dll for future use. The module handle acquired from this call is used later in the “_InitializeControl” routine with the “LoadImage” API. There are ways to acquire an icon handle from a dll without loading it, but in this case the programmer chose to load the target dll for some reason, which opens the vulnerability.
It looks like the security side-effects of one module are not evaluated fully before it's combined with other modules.
We recommend following this Microsoft security advisory to disable icon display or the WebClient service until a patch for this flaw is released.