What is it?

The general concensus on the net is that aolsoftware.exe belongs to a legitimate 3rd party application from AOL, however there may be a virus infection related to aolsoftware.exe

What does it do?

aolsoftware.exe may be an infected file associated with the internet worm SDBOT.COV

The worm targets the registry to ensure that the code is executed each time windows loads. WORM_SDBOT.COV may also be associated with the startpage-IH virus.

More info and removal:

[url=http://www.trendmicro.com/vinfo/virusencyclo/default5.asp?VName=WORM_SDBOT.COV]here[/url] is info at trendmicro.com regarding worm_sdbot.cov