FWIW, the install window Patrick overlaid on top of InstallMonetizer's site in that screenshot is not actually InstallMonetizer.
In the end, we don't have much information about what IM adds to installers--I suppose they don't want it too well known. We'd need to find an app that uses their installer to get a screenshot of it. Their website does give us some clues: one image shows an offer that is made to look like a license agreement, thus duping people into clicking Agree. Another clue is how they repeat that they "manage all optimization and conversion to ensure highest earnings," which I take to mean their wording and choices are designed to trick people into installing items they didn't ask for.
PS: installmonetizer.com website is down for now
Norton is well known to have a preinstalled version in new computers that it's almost impossible to uninstall. I don't have a screenshot, but there is one in these articles: http://www.zdnet.com/blog/bott/can-microsoft-cure-pc-makers-...
(Perhaps the version that they install trough InstallMonetizer is more user friendly, but I'm at least a little afraid to try it.)
Either way, strikes me as a dubious and reputationally dangerous model for YCombinator to get involved with.
Initially, YC just has the business model / product description statement from the founders, a video (do they still do that?), an MVP if one exists, and maybe a meeting with the founders.
The only way this could really negatively reflect on YC's integrity -- if that's up to us to judge anyway -- is if the accusations turn out to be true and YC either chooses not to investigate or chooses not to counsel the founders against doing something like this. (Remember, YC does not have a controlling interest in the teams.)
Since pg has said they're checking in to it, I don't think "YC is turning evil" is a reasonable narrative here.