GregOne posted a thread at WebmasterWorld and HighRankings Forums about how his Google AdWords account was hacked into. By reviewing both threads and all the posts, I was able to piece together some of the story.
It appears that some external program gained access to his computer. The program then logged into his AdWords account, set up several ads that redirected to "places like orbitz.com and business.com" and also tried to install "activex remote desktop program" on those computers through the redirects (to infect other computers). Then it blocked access for that computer to login into AdWords by setting the local host files to 127.0.0.1 adwords.google.com (which means if someone on that computer tries accessing adwords.google.com, they get a not found). This prevents this computer from logging into AdWords to see if changed have been made to the account.
In addition, the password for the account was not changed so he was able to login with a different computer to see these changes. Also, he noticed that the credit card information in the account was not his. Possibly a stolen credit card from someone else, which is weird to me.
Pretty nasty and potentially costly computer exploit. So beware.
AdWordsAdvisor at WebmasterWorld told GregOne that a private message was sent his way.
Forum discussion at WebmasterWorld and HighRankings Forums.