full-disclosure - Reacting to a server compromise

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From: marklist at comcast.net (Mark)
Subject: Reacting to a server compromise

Hello list,

      In light of the current state of the internet with the DCOM vuln, I
would like to ask for some advice on a situation I had at work.

A little while ago(but before the DCOM vuln was released) I had a Win2k
box hacked.  The box was outside our firewall, running minimal
services(ftp/www/smtp - gateway only) and was set to download/install
everything it could via Auto-updates.  Apparently I didn't reboot it
often enough for all of the updates to take effect.

Personally I really don't care how the hacker got in, as the box has now
been replaced with a hardened Linux server, and when the attacker had
control, they were still outside our firewall.  The attacker created a
user account with admin privs, installed a trojan, disabled all network
access to any users except this new account, and proceeded to hack other
vulnerable NT machines out on the net.  I found a list of about 100 IPs
with usernames and passwords that were either blank or the same as the
username.

My question is: Do I report this, and run the risk of the Feds charging
me because these attacks originated from my subnet?  Do I inform the
owners of the machines that were hacked that their systems have been
compromised? Judging from the usernames, some of these machines belonged
to doctors offices, and may contain sensitive information.  Or should I
just have a nice cup of STFU, and pretend nothing happened?

Before the flames start about how I'm such a lazy admin, I'd like you to
know that I'm a developer full-time for a small company with a small
budget and I manage the network with my "free" time.  Yes it was stupid
to stick a windows box out on the net without a firewall.  I tell people
all the time the same thing, maybe I'm just a sadist that likes watching
M$ boxes get hacked, I don't know.  But in that instance I really didn't
care.

I'd appreciate any comments anyone has....

Thanks,
Mark