The original music CD rootkit fiasco didn't inherantly damage your machine, but it was possible for malicious code to use the rootkit to hide itself (an obvious and dangerous security hole). The rootkit was masking DRM code that would then prevent people from ripping the songs off the Sony CD's more than a certain number of times.
However, getting rid of the rootkit was much more problematic. Some of the first computer experts to find it discovered the removing it manually ended up creating other problems (for example the dudes cd-rom drive stopped working after he removed it, stuff like that). None of the problems were permanent obviously, but the more frustrating something is to fix, the more angry people get lol.
What really pissed people off (and what Sony did absolutely wrong) is they first denied it even existed, and then finally after being confirmed and labelled malicious code by the majority of the computer security firms, the Sony exec made his final blunder by telling people they shouldn't worry about it because they don't know what it is anyway.
Which leads me to wonder what the heck they were thinking about using any sort of cloaking techniques at all, even if it wasn't for the same purpose. You'd think that they would be super aware of things like this and make sure it didn't happen again...
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