In an effort to determine this first hand we pitted the highly popular Trend Micro PC-cillin Internet Security 2007 suite which we had just got in for review up against Windows Defender. We did this by visiting several questionable sites that we knew downloaded dangerous cookies. We also loaded a known low level virus. In addition we made sure that both protection applications had the latest upgrades loaded.
The results after 90 minutes of testing were quite astounding. Firstly Windows Defender came back showing the Windows Vista system was totally clean. The message said that "No unwanted or harmful soft detected". The Trend Micro PC-cillin Internet Security 2007 suite on the other hand found 32 questionable files including the ones we had deliberately loaded.
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So the answer is crystal clear one does need third party protection software like the Trend Micro offering which we used for this exercise.