Your email address was found on a virus/worm infected computer (probably belonging to someone you know or have emailed or received email from in the past – it does not necessarily mean you have a virus on your computer). In addition to the virus attempting to send itself to your email address, which was most likely stopped by our server’s anti-virus software, it sent itself to others using your email address as the FROM. (i.e. it faked your email address).
In other words, once these worms/viruses find a list of emails (usually in people’s address books) – they use that persons computer and those emails not only to send “To” people, but will also to use the “From” address. If your email address is on a computer that is infected, the virus may “fake” the From address as “your address” and try to propagate that way.
When those emails reach their destination, some mail servers will try to send a notification back to what they “presume” is the correct email address. In the past a virus would actually show the real FROM, and sending notifications made more sense, but these days the FROM is almost always forged, using either the method mentioned above or just a completely fake email address. This is why mail servers should no longer send out notifications when they find infected emails. Unfortunately, some still do. There is a new mail standard being proposed that would make it much harder to forge a FROM address, but this has a long way to go, and may take years to implement.
In a nutshell the worms/viruses infect computers and turn the computer into a mail server propagating itself by sending itself to any emails that are stored within that computer.