Do you need a Firewall? Well, the long answer starts with the words "it depends....", but I'll try to make it simple.
Fact: If you have a router (note: NOT a simple Hub), your IP addresses are hidden by the router, so it is acting as an "incoming block" firewall.
Fact: You are allowing certain traffic through that router, when accessing the Web, email, FTP, certain games, etc.
Do you need a Firewall? Well, the long answer starts with the words "it depends....", but I'll try to make it simple.
Fact: If you have a router (note: NOT a simple Hub), your IP addresses are hidden by the router, so it is acting as an "incoming block" firewall.
Fact: You are allowing certain traffic through that router, when accessing the Web, email, FTP, certain games, etc.
Fact: There are firewalls that block or filter OUTGOING traffic as well. Your router probably doesn't attempt to do this, other than provide a feature called network address translation (e.g., the "hiding" of IPs)
Fact: There are certain known vulnerabilities in Windows operating systems (and there may be other unknown flaws) that could, under some circumstances, allow certain malicious traffic to gain unauthorized access to your system, despite the presence of a router/firewall. Some of these (e.g., those containing so-called buffer underrun flaws in various Windows internet tools) could still lead to hack attacks even if you add a separate firewall. Patching the flawed code, via Microsoft's updates (such as the most recent "Service Patch 1 cumulative update" patch for Internet Explorer) is the best defense against these risks.
I am of the opinion that an additional firewall (e.g., McAfee Internet Security 5, Norton Internet Security, ZoneAlarm, etc.) is unnecessary, unless you want to monitor and optionally filter all incoming and outgoing traffic that your router considers normal to allow through. I have installed such a firewall on several of my test machines, and the benefit is dubious. Whether or not you choose to install such a firewall and deal with the considerable extra complexity it introduces into your system is up to you. I wouldn't, personally.
However, you MUST consider that the patches for the Internet tools you choose to use (and thus allow access to the Internet) are ESSENTIAL. Otherwise, hackers can take advantage of an "allowed" conduit, and use it to execute an exploit of the many forms already known to plague Windows (and/or other) operating systems and applications. A few other the common exploits involve JavaScript, Java, ActiveX and other features you probably have enabled on your system.
Most, if not all versions of IE (especially version 5.0 and earlier, and unpatched versions released as recently as Dec. 2002) have known vulnerabilities that could be exploited to gain access to your system or even, in some cases, to erase your hard drive. Without sounding like an alarmist, that's the bottom line: even WITH a firewall installed, a web page you visit (which, as I note above, we know is allowed by your router or any firewall's default settings) or an email you open could contain malicious code that *could* erase your hard drive.
Thus, the definitive answer is not just to pile on yet another firewall. The answer is to:
The above steps, in my opinion, will give you a better degree of "real" security than any firewall in existence. The easiest way to keep a Windows system up to date is to use Microsoft's automatic "Windows Update" service to automatically download and install available updates.
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