Ottopress has published an article “Anatomy of a Theme Malware” covering how some themes have code within them that installs malware onto the web server and functions.php file contains base64 encrypted code that when decrypted, shows spam links.
The article has examples of where to look for compromised code.
Ottopress recommend getting your free themes from WordPress.org Extend-Themes instead.
Full article at: http://ottopress.com/2010/anatomy-of-a-theme-malware/
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WordPress Theme Malware Prevention and Protection article at: http://wordcastnet.com/news/2010/12/11/wordpress-theme-malware-prevention-and-protection.html