HI ppl
its not just agent_steal who is confused, its me too. I dunno what is the reason for mails being sent from MS Outlook, and am mighty confused.

moxnix , the mails are being sent to contacts in my address book :-(
I would do as you suggest and check the activity.
Besides it would be of great help to me if anybody could tell me how to identify whether there is a trojan on my comp.