Windows 7 is arguably the most thoroughly publicly tested piece of unreleased software in the history of software engineering.  An unprecedented testing program offered up both a beta and a release candidate build to the public, with millions taking the new OS out for a test drive worldwide.  Many problems were thus identified and fixed.

Overall, Windows 7 is more secure, thanks to numerous protections.  However, a block of code called the SMB (Server Message Block) 2 -- which implements a network file- and print-sharing protocol found in the test builds – was recently found to have an exploitable vulnerability.  Early testing demonstrated the vulnerability could be used to blue screen Windows boxes.

Now, more thorough research has demonstrated that the flaw can be exploited for complete system takeovers.  Miami Beach-based Immunity, makers of the CANVAS penetration testing framework, built a proof-of-concept exploit that uses the SMB 2 flaw to execute remote code.  The exploit was released last Wednesday to paid subscribers. 

This week Mark Wodrich and Jonathan Ness, both members of the Microsoft Security Response Center (MSRC) engineering team, posted a blog discussing the exploit.  The good news, they say, is that its fixed in the RTM build and will not be present in the retail release of Windows 7.  The bad news, they say, is that in the Release Candidate and beta builds, the flaw is every bit as severe as the security firms indicated.  Writes the pair, "We have analyzed the code ourselves and can confirm that it works reliably against 32-bit Windows Vista and Windows Server 2008 systems.  The exploit gains complete control of the targeted system and can be launched by an unauthenticated user."

Meanwhile, security researcher HD Moore says that the exploit will soon be added to Metasploit, an open source security toolkit he helps write.  The kit is free and widely used by hackers to craft attacks.  In other words, expect the SMB 2 attacks to be coming in weeks, not months.

Microsoft is hard at working crafting a patch to deploy to its testers.  Microsoft's next patch day is still a ways away, though -- October 13.  In the meantime it's offering users a "Fix-it" tool as a a stop gap solution.  The automated tool, available here, will disable the SMB 2 code and prevent its exploitation.  Microsoft and security firms are strongly urging users (that includes beta testers and enthusiasts running Release Candidate versions of Windows 7) to run the tool as soon as possible, though Microsoft believes there are no working attacks currently in the wild.

While some have taken the SMB 2 bug as an opportunity to fling mud at Windows 7's security, it's best to reserve judgment for the final product.  If Windows 7 releases with few flaws, Microsoft (and its testers) should be thanked for its unprecedented testing program that has caught potential "show stopping" vulnerabilities like this one.  With robust protections, upcoming free anti-malware protections, and a rapidly diminishing list of exploitable routes, Windows 7 is shaping up quite nicely.

While testing is a great experience, this security crisis also goes to show that those testing should be aware of the dangers they put themselves in, in terms of security.  While fewer attacks will be geared specifically toward unreleased software, it is likely that test software will have more exploitable flaws.  With great new software comes great responsibility to stay vigilant and informed, and get the latest protections and workarounds, while the vendor polishes the final product (granted, this axiom applies to release software, as well, to a lesser extent).

Update 1 11:21 p.m., Mon. Sept 21, 2009:  Some users are reporting trouble running the tool to disable the SMB.  As Microsoft's security advisory lists the Windows 7 RC (see the Faq, it's not in the lists OS's) as affected, and says to follow the advised steps, its unclear what to do here.  Brandon Hill tried to run the tool in the 64-bit version of the release candidate, like the commenter did, and confirmed that it fails.  Its unclear if the tool works for 32-bit release candidates, the betas, or none of the Windows 7 releases at all.  We'll update further as we get more details.

Update 2 8:15 a.m., Tues., Sept 22 2009:  Windows 7 RC and beta users can and should run the tool, however, you won't be able to just execute it and run it like that. Follow these steps:
1.  Download the tool here (this is the same tool I previously linked to).