Very interesting subject!!!

found this:
At the same time, virus writers developed methods to hide their viral code in plain view by altering its appearance. Polymorphic viruses encrypt their code using a variety of encryption schemes with varying decryption routines. However, the viral code can be readily identified once decrypted, thanks to the unchanging portions of their code, such as a data area filled with string constants. Polymorphic viruses must have a "head" or decryptor that exists to decrypt the encoded virus and allow it to run. Polymorphic viruses may alter their appearance by changing the order of subroutines, and injecting random junk code like NOP (null operation) instructions. Examples of polymorphic viruses include SMEG.Pathogen (whose U.K. writer was caught and sentenced to 18 months) and Elkern, the companion virus to the Klez worm.

from security focus