LOL! iMesh claims the same. They can say that its not spyware because it technically doesnt spy on you, or their privacy policy states they dont use any info that their software sends back to them.
Ok, so its not spyware, its spamware. They install lots of software designed to sit in the background, hijack internet explorer, and ram random popup advertising down your throat continually. It's malicious either way.
From their FAQ:
Kazaa Media Desktop is a free download with the costs of operation covered by legitimate sources. These are:
Content - payment for distribution of Rights Managed content (marked with Gold Icons).
Regular banner and pop advertising - within KMD and Kazaa.com (DoubleClick and Cydoor).
Cydoor and DC are both well known, and extremely annoying adware applications.
SaveNow - presents coupons and offers that are related to the websites that you are visiting. SaveNow operates and is managed separately to Kazaa Media Desktop.
Likewise, and erm, how does it display ads ('offers') related to pages you are visiting without spying on what pages you are visiting? Hmmm, interesting.
Solution:
www.k-lite.tk