Did the Java 1.6.0_31 update fix the Flashback trojan problem?
It fixes the vulnerability that Flashback used to install itself; this Gizmodo article gives some more info to check:

1. Run the following command in Terminal:

defaults read /Applications/Safari.app/Contents/Info LSEnvironment

2. Take note of the value, DYLD_INSERT_LIBRARIES
3. Proceed to step 8 if you got the following error message:

"The domain/default pair of (/Applications/Safari.app/Contents/Info, LSEnvironment) does not exist"


If you don't get that error message, well, time to head to F-Secure for your fix. If you're clean so far, you can move on to step eight:

8. Run the following command in Terminal:

defaults read ~/.MacOSX/environment DYLD_INSERT_LIBRARIES

9. Take note of the result. Your system is already clean of this variant if you got an error message similar to the following:

"The domain/default pair of (/Users/joe/.MacOSX/environment, DYLD_INSERT_LIBRARIES) does not exist"


If you don't have any anti-virus protection enabled, you might want to check out the excellent (and free) Sophos Home Edition