Futher to this I post the following from my hosting support (ICDSoft.com – highly recommended)
Although phpBB is not installed on your site, there were many other users on the same server that were using phpBB, and once they got infected, the worm tried to overwrite all world-writable files on the same machine. This is why your pages have been defaced.
There are many script installations, which advise the users to set 777 permissions to some of the files. This is because SuExec is not a part of a standard web server and in most cases, all scripts on the server (no matter which user is their actual owner) are executed with the permissions of the web-server user. So, if these scripts need to write something to some file, they should that file will need world-writable permissions. This is not the case with our hosting environment – with us all scripts are executed with the specific permissions of their owner, so any files that need to be written to, can just have owner-writable permissions.
Currently, there is no way of telling whether you had files with world-writable permissions on your account. In order to prevent further defacements, we have set 775 permissions to all world-writable files when the worm hit us.
However, world-writable permissions on your files are the _only_ way that a script running as another user can damage your files. There is no hole in the SuExec wrapper that we use – we have carefully reviewed the worm’s code (it is coded in Perl), and we are quite familiar with its course of action and it signature.
You should not worry about your WordPress installation – there is actually no security hole in the urldecode() function, it is the specific way that its output was later used, that caused the vulnerability in phpBB. google-hilite.php is also not related to this.
Do we accept this as gospel? Is there some file in a default installation of WP that has permissions set to 777? Because I personally would never set permissions on a website to that.
In any event, it would appear that this attack come into my WP scripts via another user’s phpBB scripts.