Copyright 1999 - 2006, Sandra Hardmeier, All Rights Reserved Worldwide
Last updated 20/08/2006

A comprehensive discussion about the meaning of various terms, including spyware, can be found here:
http://en.wikipedia.org/wiki/Spyware

Spyware
Software that tracks user specific information and forwards it on to a third party or the spyware's designer/supplier.  For the purposes of this definition, software that phones home for the purpose of 'legitimate' updates, such as antivirus programmes checking for updates, and software that transmits user specific information for the purpose of confirming eligibility for updates/upgrades is not classed as spyware.  Programmers are entitled to ensure that their software is not being pirated, and that pirated software is not receiving the same benefits as legitimate users.

Adware
Software that generates advertisements such as pop-up windows or hotlinks on web pages that are not native to a page's code.

Malware
Software that damages your system or causes instability/crashes.  Also used as a 'catch-all' name covering spyware, adware, foistware and betrayware.

Foistware
Additional software included with a particular product, without which the product will not operate, or which is compulsory according to a product's EULA.

Betrayware (a term invented by Jim Eshelman)
"...one of the more insidious classes of weapons are programs that put themselves forth as anti-parasite programs but, in fact, deploy adware and/or spyware themselves! Sometimes this software is free sometimes they actually charge you money for it! but all programs in this class lead you to believe they are making you safer, while actually invading your computer as insidiously as any other scumware..."
http://aumha.org/a/parasite.php#betray

On the subject of betrayware, a company by the name of 'D Squared', based in San Diego, California and created by two college students (Anish Dhingra and Jeffrey Davis) has been banned by US regulators from using the Windows 'Messenger Service' (not to be confused with Windows Messenger, the Instant Messaging Programme) to generate unwanted pop-up ads on people's computers (also known as netbios spam)  Interestingly, a company of the same name is associated with several *anti popup* sites, including 'blockmessenger.com', 'defeatmessenger.com' and several others.
(cite: http://www.ftc.gov/os/caselist/0323223.htm, http://www.ftc.gov/os/2003/11/0323223domains.pdf, http://news.bbc.co.uk/2/hi/technology/3551356.stm, http://www.ftc.gov/opa/2003/11/dsquared.htm)