Yeah - I've thought about that. The most recent things are the Microsoft security updates so I wonder if they're in conflict somehow.
When it is first executed, it copies itself to %System% or %Windows% as Kernel32.exe, based on the control bits. Then it registers itself as a service process (Windows 9x/Me only). It creates the key log file %System%\Cp_25389.nls and drops %System%\Kdll.dll which contains the key logging code.
Symantec site
They could be, but if it is a Win98 machine, there could be residual conflicts that don't become apparent until "triggered".
For example, if you are using McAfee and using SSL encrypted e-mail, your outgoing mail will sometimes just freeze up. This is because when McAfee updates it's software it is sometimes coded to automatically turn on the "Scan outgoing e-mail" option, which completely freezes outgoing encrypted messages as McAfee can't access them.
That's just one of many scenarios where a problem exists, but you don't see it until an innocent upgrade turns it on.