It sounds like a DLC promotion for Halloween, but unfortunately the Graveyard virus is a real threat to the Xbox 360 community as they try to join Borderlands 2 online games.

The Graveyard virus works by replacing your original save file with an infected file. The virus renders your characters useless, as once they die in the game, they will not respawn.
The virus stems from a hack that is forcing all players to play using 'hardcore' mode, which means that once your character dies, that's it - they will never spawn again.

Gearbox community manager, Chris Faylor, has advised that "concerned Xbox 360 players of Borderlands 2 should consider playing online with trusted individuals in non-public sessions." Faylor states that this hack is not affecting gamers on PC or PS3.

Faylor offers this piece of advice on the Borderlands 2 forum:

"We also advise that before ceasing play, users always select "Save and Quit" from within the pause menu while their character is alive. If after the death of their character players find themselves at the main menu of Borderlands 2 instead of respawning in-game, be sure to immediately select "Continue" to resume playing as that character."

An update to prevent this hack has been submitted to Microsoft, and will be published as soon as possible. Faylor requests that any players experiencing problems with Borderlands 2, report the issue with as much detail as possible to [You must be registered and logged in to see this link.], to assist in the investigation.