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Where It Harms You
Obviously, as your hard drives are the only fixed writable medium of persistent storage you have, it will be here that bad software harms you. Intermittent difficulties while running a bad program can be overcome by simply exiting the sorry mess. What is harmful however is software that affects your system even when said software is not running, or perhaps no longer even 'installed'.
Overwriting Files You Already Have
A lot of the misery with bad software occurs in the 'install' phase, and a lot of this misery happens because the 'bull in the china shop' install program overwrites files you already have. When these files are proprietary system files there is no excuse.
Third rule of thumb: No ISV product ever need get near your system files.
If an ISV product wants to access common files from its previous setups, it can do so via the Registry. If an ISV product thinks it has more up to date operating system files than you do, well gee whiz thanks guys - but stay the hell out. If an ISV product is completely dependent on such an upgrade to your system files, then their website should say so explicitly and offer such an upgrade - preferably from the system vendor itself (Microsoft) - as a separate download URL.
Install programs have a wicked habit of flashing hundreds of messages by you as they chunk junk all over your disk and into your Registry, and there is no way in tarnation anyone can ever grab all that at once. It makes you wonder what the rocket scientists who designed these install apps were thinking - or rather why they were not thinking. Still, even offering to overwrite a system file during an install is strictly verboten. Good software will attempt nothing of the sort - only bad sofware will.
There is never any excuse. What is contained in your 'Windows' directory and below is not only proprietary to the operating system, it is your property, and encroaching on this property is trespassing. Regard any software which ignores your rights with the greatest suspicion.
Clogging Your Registry
'Insidious' is the only word that comes to mind when reflecting on what these install programs can do to a Registry. The Registry is a vital organ in your operating system. It must function perfectly; it cannot be corrupted; and it should remain 'lean' at all times. A clogged Registry will eat up your disk space and even worse, it will slow your system performance: your puter will stop purring.
Most uninstall program authors simply do not care enough about your best interests and respecting your private property: Again, your Registry, as your hard drives, is your private property. Good software doesn't even need to go near the Registry. Especially Visual Basic apps will toss tons of junk in here because they are dependent on so many lame modules to work - which unfortunately will work no other way.
Next: What To Avoid