OK, this may not be connected and I really am clueless about coding, security etc.
But a blog that I used this on was hacked the other day. I did a Google and found this site: http://www.bbqiguana.com/2011/05/iframe-insertion-php-exploit/ which talks about the exact same virus that I had on my site.
My web host suggested that generally viruses get in through applications that allow uploads, which is why I Googled "Add Linked Images To Gallery" +exploit to see if any one else had reported a problem.
This is a fantastic plugin, I found it extremely useful. But there is a possibility that it has an exploit that some hackers are using.
If the problem is something else, I am really sorry for mentioning it. As I said, I am clueless about this stuff!