The term KEYLOGGER is used for the software and hardware device which are used to moniter the key stroke of a computer system. These programs and hardware device trace every keystroke of a computer system, so the person who installed this on the system can easily get the password and other information which he want to get. The most harmful part of the keyloggers is that it can be bind with a spyware allowing your information to be transmitted to an unknown person via network.

It runs in background and many times it is hidden in task manager process too. It is most harmful for those who use to do e-banking with their computer systems. 

A keylogger normally consists of two files: a DLL which does all the work and an EXE which loads the DLL and sets the hook. Therefore when you deploy the hooker on a system, two such files must be present in the same directory.

There are other approaches to capturing info about what you are doing.

Hardware Keyloggers A simple hardware keylogger may look something like this:

In this picture you see a hardware keylogger that connects between a PS/2 keyboard and a PC. 

Software Keyloggers: These are software programs used to capture keystrokes at a machine. To download these software keyloggers, go to my older posts on keyloggers. There are many software keyloggers available which runs in background and hidden in task managers processes list. It is hard to detect those softwares.