Spyware is software running on your computer that transmits information back to a third party without your knowledge or permission. That information can be anything: lists of web sites you visit, or passowrds and credit card numbers. You never really know.
Adware is software running on your computer that displays advertising. Some software can be adware and spyware at the same time. Not all adware is spyware, and most spyware does NOT display advertising.
You put it there. Adware and spyware software usually offers to deliver some amusement or useful service. You install it, and it takes over. Some of the most common examples include:
Bonzi software, including Bonzi Buddy, Internet Boost, Internet Alert, Intruder Alert, and Voice E-Mail.
Gator, including Gator eWallet. By Claria, "The Leader in Online Behavioral Marketing"
Get rid of it. Some anti-virus products detect and remove adware and spyware, but sometimes removal is easier said than done, because the makers of these software products do not want to lose your data. The best bet is to install special adware/spyware removal software. There are two excellent, and free, adware/spyware removal program available:
Note: Just like viruses, new adware and spyware programs are coming out all the time. So, just like anti-virus programs, adware/spyware removal systems must be updated frequently. Updating is free and easy, but you have to remember to do it before you run an adware/spyware scan.