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Hello,
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Are we allowed to do this?
My understanding is, Yes you can remove the link.
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somebody told me that the hackers are finding our XOOPS sites by tracking that "powered by xoops" link
If you put a image link it's still a link but I don't really believe that's what caused your hack.
If it was a vulnerability in XOOPS it more than likely came from a bot that searches all websites for vulnerability, but I don't believe that was your issue either.
It could have been an issue with a third party module but if it came from a seasoned programmer it would have been posted up to other programmers before it was released 1.0+ and would have been tested well before a stable release.
More than likely it was a vulnerability produced on another website if you are hosted on a shared server without some type of firewall or some other code on your site.
I have experience on this topic as I was seriously hacked once and it completely took out seven sites of mine. I had the same reaction as you but ultimately (with a great deal of help from the host) we discovered that it was test site that I thought nobody could access, with some poor code, that actually caused the problem.
Just "food for thought" but in my opinion you are looking in the wrong direction. I suggest VPS, developing locally, and only using stable module releases.
Good Luck,
Steve