joechung said:

Hmm, a spyware detector included in Google Pack claims that a Baidu BHO is spyware.

Baidu is a popular search engine in China, more popular than Google China.

There seems to be a conflict of interest here...

What's even more surprising is that it appears that the said spyware detector does a blind scan ignoring the usage of registry keys. Even if that "Extension Compatibility" key is not documented it should be pretty obvious what it does. Besides, if the computer was really infected then shouldn't the dll file be somewhere around?