Desktop.ini is used to tell Windows how to display a folder. For example, enabling Thumbnail view creates a desktop.ini file in that folder which amongst other things, tells Windows to add an extra item to the View menu for that folder. Desktop.ini files are also used when you customize folders, change their icons etc.
The problem is that "desktop.ini" files may contain CLSID references to arbitrary executables in the "[.ShellClassInfo]" section. This can be exploited to execute arbitrary files with another user's privileges when the user browses a folder containing a malicious "desktop.ini" file.
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