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thats not as scary as it sounds..
i once was infected with a trojan that did the same thing - it would open itself whenever a exe was opened because the trojan added some stuff to the registry telling it to launch the program when a exe is loaded.
all this virus does is replace exe with jpg (perhaps making it less dangerous)
by sending a "infected" jpg to another person, nothing will happen unless they opened the original exe which adds stuff to the registry
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