2 days ago: My brother Alvin and Brian report suspicious activities on the computer in their room. Random Chinese popups appearing, mysterious processes in the taskbar. As needed, virus scans and adware scans are done. Trojans are identified and quarantined, but keep reappearing. Brian plays WoW on the machine despite the issues.
Yesterday: Alvin decides to reformat the machine and begins backing up. Brian plays WoW on the machine in my room instead.
Tonight, around 8 PM: I'm surfing the ‘net at work before I go for the day, I receive an instant message from Alvin telling me they can't login to the WoW account. I try the password recovery, but it won't accept my details. I IM Alvin to keep trying, and hurry home.
Around 9:30 PM: I notice emails that tell me that a paid character transfer has been performed on the WoW account. We've been hacked! I immediately use the web form on Blizzard's site to report the incident. I've already lost $25 to the hacker.
We still have no idea how it happened. My best guess is a keylogger on the other machine that trapped the WoW account password. We've been toning down the WoW-playing lately, so it may be time to kill the account, if Blizzard actually responds in time. In the worst case, I'll need to have my credit card canceled if Blizzard refuses to help.
Edit 23-Nov 7:37 AM: Around 12:30 AM today, Blizzard reset my account password and notified that they were in the process of character transfer reversal. I immediately went in and updated the details. Very good service, Changed my passwords elsewhere too, for good measure.
More as it develops...