One who breaks security on a system. Coined ca. 1985 by hackers in defense against journalistic misuse of hacker (q.v., sense 8). An earlier attempt to establish worm in this sense around 1981--82 on Usenet was largely a failure.
which would seem earlier than the parent's recollection, but it had probably been floating around in the collective engineering unconsciousness for some time. Of course, the etymology can probably be traced back to non-electronic crime, such as burglary (safe cracking/safe crackers).