The discovery of a spy ring, the second in a decade, also reveals the existence of deep-cover or sleeper agents from the communist neighbor, even when the two Koreas were engaged in brisk cross-border exchanges backed by two rounds of summits between their leaders.
Seoul's intelligence agency and prosecutors said they apprehended a female North Korean spy posing as a defector, who had been handing over sensitive military information from the South to her communist homeland.
Won Jong Hwa, 35, is suspected of collecting information, including photographs and locations of key military installations and weapons systems, partly by offering sexual favors to military officers. One of her lovers, identified as a 26-year-old army captain, was detained for offering classified information to Won even after he found out she was a North Korean spy.
After obtaining information in South Korea, Won handed it over to North Korean agents in China. She frequently traveled to China and delivered to North Korean intelligence agents there the name cards of more than 100 South Korean officers, whose e-mail accounts are said to have been hacked into from China.
Won was first dispatched to China, where she was commissioned to kidnap North Korean refuge-seekers in China for repatriation, and South Korean businessmen to the North.
In a bid to reach Seoul, Won married a South Korean worker in China, disguising herself as a Korean resident in China. She divorced her husband immediately after entering the South in October 2001, and falsely reported to Seoul's authorities that she was a defector from the North, according to investigators.
In the South, Won was allowed to give anti-communist lectures to the military, and she used the occasions to make contact with army officers. She engaged in romantic relationships with several South Korean officers to get military information.
Her mission also included locating Hwang Jang Yop, the highest-ranking North Korean official ever to take asylum in Seoul, and other anti-communist activists in the South, and possibly assassinate them.
Hwang, who had served as secretary of the North's ruling Workers' Party in charge of foreign policy, has led a campaign against the communist regime in Pyongyang since his defection to Seoul in 1997.
Won was ordered to murder two people "with links to" Seoul's spy agency with poison-tipped needles, but she failed.
These assassination instructions reminded South Koreans of the mysterious killing of Ri Han Yong, who defected to Seoul while studying in Moscow. Lee, a nephew of Song Hye Rim, a deceased wife of the North Korean leader Kim Jong Il, was shot and killed in 1997, probably by North Korean agents.
Won passed the military information to North Korea via her senior agent and stepfather, who was also disguised as a refugee from the North. The 63-year-old stepfather, identified only by his family name of Kim, entered the South in 2006 via Cambodia. He also has been detained.
Kim is a relative of North Korea's No. 2 leader, Kim Yong Nam, chairman of the presidium of the Supreme People's Assembly. Investigators refused to give further details about Kim, who is considered to have played a central role in the spy ring in the South.
The spy agency said more North Korean spies might be mixed with North Korean defectors. Some 14,000 North Koreans have resettled in the South since the end of the Korean War in 1953, with the number growing rapidly in recent years.
About 2,700 of them are believed to have left for other countries, including the United States, according to a Seoul-based human rights group. They may include espionage agents.
"There had been suspicion that spies may mingle with North Korean defectors," Kim Kyung-soo, a senior prosecutor, told reporters. "The suspicions have turned into reality for the first time with this case," Kim said.
The arrest of Won and her stepfather marked the second discovery of an alleged North Korean spy ring in South Korea in the past 10 years, when liberal presidents in Seoul pushed for the "sunshine" policy of peaceful engagement with the North.
In 2006 five spies, including a Korean-American businessman, were arrested in "one of the biggest spy cases." The spies, using a base in China, passed to the North "national secrets" from the South, including the movements of U.S. troops and the backgrounds of hundreds of politicians, among other things.
But there have been accusations that the spy agency toned down this case, so as not to upset the detente with the North.
Seoul's former spy chiefs played high-profile roles in arranging the two inter-Korean summits, in 2000 and 2007, both held in Pyongyang -- sparking criticism that they acted as if they were diplomats.
On the strong wave of cross-border reconciliation fever, there were more and more North Korea sympathizers in the South, including politicians, businessmen and civic activists. Many activists contacted North Koreans and visited the communist country without government approval.
But conservative President Lee Myung-bak, who took office in February 2008, has overhauled the spy agency to boost its North Korea intelligence-gathering role and its efforts to crack down on possible deep-cover or sleeper agents from the North.
"This case shows that North Korea has never changed and is still stepping up its policy of trying to communize the South and spreading deep into our society," Defense Minister Lee Sang-hee said, calling for the defense intelligence agency to step up anti-espionage operations.