What was the specific exploit in the Tx script evaluation process?
Explanation by Mike Hearn: https://bitcointalk.org/index.php?topic=152470.msg1620493#msg1620493
When Bitcoin was first released, it contained two completely fatal bugs that made the entire system worthless. Fortunately, they were found and fixed before Bitcoin actually had any serious value.
The first bug was that scripts were concatenated before being run instead of just using a shared stack. This meant that anyone could write a scriptSig that always evaluated to true and claim anyone elses coins. Fixed here in v0.3.2:
Needless to say, if somebody when this version was first released actually wrote such a scriptSig and stole some coins, that would have caused a chain split between old and new versions. Nobody did because, why bother? I'm not even sure Mt Gox existed back then, iirc that came some months later. Many script opcodes were disabled around this time (which is also a hard-forking change).