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Invisibility
Using the additional components SMSS.EXE and CSRSS.EXE the worm tries to mask (hide)itself in the system. Both files ensure the functioning of the main module LMHSVC.EXE if for any reason it appears unloaded from memory. Besides these components it looks for REGEDIT - if REGEDIT is open it temporarily removes the keys in the system registry and restores them upon the closure of the REGEDIT application. Thus the worm achieves invisibility in the system registry.
Payload
The worm starts the joke program LADY.EXE which displays a set of creeping flies which can be "killed" with the mouse cursor.
as for hijacking, since no one has mentioned it yet.. try hijackthis, but be careful of what you delete. posting a log of it either at tomcoyote's forum or here would be advisable.