Okay - Zupdate.exe seems to be the executable (ie. the bit that launches) a piece of Brilliant Digital software installs its own software with every copy of the Kazaa file-swapping software. This can later be remotely "turned on" to become part of a new network. Zupdate.exe periodically tries to access the internet. There are is an article on the whole business here:
http://news.com.com/2100-1023-875274.html
and other instructions on removal at:
http://www.pacs-portal.co.uk/startup_pages/startup
_full.htm