HI MURACU and Tiger_Shark and other antionliners,
I have found that the mails being sent are not only to those in my address list , but some weird recepients too. How I get to know that emails are being sent ? well
1. my friends are say "what mail have u sent ?, can't make head or tail of it "....even though I havent sent mails to them
2. mailer daemon notifying me that my email was not delivered to (weird) recipient.
The frequency of mails is random, couldnt find a particular pattern. In a day roughly twenty mails are being sent.

I tried to search for Trojans ... by some utility that associates ports to the processes , but could not find anything fishy, but considering I am a newbie I can be foooled easily I agree.

The plan of action I suppose will be as MURACU suggested, change my passwords. Will do so and see wass up.
And for information
1. My antivirus signature are most uptodate. <--- can this mean some virus in the LAN to which my comp is connected could be responsible for this ?
If yes then how do I get rid of the menance ?