luser /loo'zr/ n.
[common] A user; esp. one who is also a loser. (luser and loser are pronounced identically.) This word was coined around 1975 at MIT. Under ITS, when you first walked up to a terminal at MIT and typed Control-Z to get the computer's attention, it printed out some status information, including how many people were already using the computer; it might print "14 users", for example. Someone thought it would be a great joke to patch the system to print "14 losers" instead. There ensued a great controversy, as some of the users didn't particularly want to be called losers to their faces every time they used the computer. For a while several hackers struggled covertly, each changing the message behind the back of the others; any time you logged into the computer it was even money whether it would say "users" or "losers". Finally, someone tried the compromise "lusers", and it stuck. Later one of the ITS machines supported luser as a request-for-help command. ITS died the death in mid-1990, except as a museum piece; the usage lives on, however, and the term `luser' is often seen in program comments and on UseNet.
Note that popular history of IRC suggests (possibly independently) calling users "lusers", an abbreviation for "local users". An IRC network may consist of many interconnected servers; each of them has its local users, ie those who are connected directly to the server in question as opposed to those who participate by connection to another server. A server's "lusers" have additional information associated with, like a socket handle, a ping time etc.