Actually, Microsoft Security Essentials is not fake. It's a real antivirus product from Microsoft.
However, there's a rogue security product out there that claims to be "Microsoft Security Essentials". It has nothing to do with Microsoft.
This malware is distributed via drive-by-download attacks as hotfix.exe or mstsc.exe (md5: 0a2582f71b1aab672ada496074f9ce46)
Here's what it looks like:
And not only does this fake tool steal Microsoft's brand, it also features a bizarre matrix display of 32 antivirus products, offering to locate you a tool that would be capable of fixing your machine as "Microsoft Security Essentials" can't clean the malware it found. In reality, this is all fake, and the tool has not found an infection in the fail it claims.
Surprisingly, the only products that seem to be capable of handling the infection are AntiSpySafeguard, Major Defense Kit, Peak Protection, Pest Detector and Red Cross. Never heard of these? No wonder. They are all fake products.
"Microsoft Security Essentials" will try to scare you into purchasing a product you don't need. Don't fall for it.
Hopefully Microsoft's lawyers will find the clown behind this one. They would have a field day with him.