What do you think those toolbars do? Inspect and Inject javascript into webpages, send my web browsing history to their master servers. It cant imagine a toolbar that isn't malicious.

I consider this sort of software harmful, but there is definitely an important distinction between it and software that actively tries to steal your credit card numbers, run a botnet, or send spam email. We need a word specifically for software that makes an attempt to abide by the law and avoid any outright malice, yet exists in a sort of moral gray area.

I propose "grayware."

"Malware" as I understand it is basically a catch-all term for software that is harmful (hence "mal").

Don't these toolbars usually report your browsing habits anyway though? If so they are spyware which clearly makes them malware.

How about "junkware" or "crapware"?

And I thought these were already the terms we use for this type of software...

Barnacleware.

Adware becomes malware when it resists removal.