@artefaqs: That sounds a lot like what happened to me too. The forum for the forum software announced this huge security hole, I'm afraid that hackers took advantage of those sites that didn't fix it up immediately, but I can't be sure. I'm not an expert by any means, but I tried to clean my site thoroughly. I deleted all of the files apart from avatars, and other uploads, and I scanned those directories for any suspicious files. I can't be 100% sure, but I know I was thorough and haven't found any evidence to suggest there's anything malicious still going on.
When my site was infected I saw the message in the SERPs myself, and it's not there any longer, nor anything in web master tools.
I'm getting my site screened by Norton at the moment. When I checked the site with their tool, it said there was in info on the site.
In my google analytics, I compared the timeframe between when I cleared the hack until now with the same period last month. Traffic has decreased 49%, with the % of search engine traffic falling from 75% to 62%, with direct referrals taking a much smaller hit than any other source of traffic. Even one year ago over the same xmas period search traffic accounted for 83%.
I have requested more info from my users, but at this stage its looking like the message is appearing in the browsers from visitors.