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This looks to be an artifact of a virus – Troj/Daemoni-E, according to the folks out at Sophos. Get and run an updated virus scan as soon as possible.
IMPORTANT: DO NOT CONFUSE THIS FILE WITH SVCHOST.EXE. Svchost.exe (without the z) is a required system file. If you have issues you think are related to svchost.exe, see the related articles.