It appears that my roomies are some real jokers. For the past couple of weeks they have been able to know where I go on the net, mostly. I found it really strange they knew because I have passwords on everything, even the bios to boot my computer, and only I have access to it. Then one day one of them mentioned something about a packet sniffer. How can I keep them from doing this? I read that a VPN that's encrypted is the only way? What other solutions would be cheaper (broke college kid here) and easier to do than a VPN?

Get your own internet connection and password secure the router and wireless access

There are only 3 ways to secure your traffic
1. Ensure no one has physical access to it
2. Ensure that you only use SSL (https) access for email and web use
3. Set up a remote server somewhere in a secure location, that you can VPN to, and then have it send traffic on to the internet

It could be a lot of things. Either a harware or software keylogger would record keystrokes. A trojan or backdoor would allow them access to your browsing history. A packet sniffer would allow them to see the data stream.

Since they mentioned a packet sniffer, I'll assume that's how they are doing it. Basically, they route all of the network traffic through thier machine before it goes out onto the net. Unless you have both physical and logical access to all of the network hardware, there is really nothing you can do to stop that. The only way to block them is to encrypt all the traffic. A VPN is the only practical way to do that. There are a lot of VPN services out there. Google Hotspot VPN and you will see a lot of fairly cheap ones. They will block them from seing any of your traffic.

The larger issue here is that they need a good old-fashioned ass kicking. I personnaly would never put up with that crap. I travel with a bunch of these types and they are always messing with the hotel networks. I have a simple policy that if I catch them, they will pay in every way possible (and I use a VPN to keep them honest). Depending on who owns the network, there could be severe criminal and civil penalties involved. At the very least, it's a serious breech of trust and needs to be discussed. This is no different than them putting a camera in the bathroom, tapping the phone, or opening your mail. Time to get new friends.

The either have a key logger on your machine or are sniffing the wire.

One way to check is to install JAP (Java Anonymous Proxy), and use that exclusively for going to web sites. They won't be able to see where you are going on the web, and if they can, they have a keylogger other spy software on your PC.

You could just type "I think tonight is the night I can't stop the voices from making me kill them" and see how they react.

Are you on a wired or a wireless connection? I'm going to assumed wired, or else wireless with no encryption. Best way to avoid packet sniffing is if all of your traffic is encrypted - easiest way to do that is to use a wireless access point or router with WEP turned on. Then they can sniff all day long & get nothing but encrypted garbage. Just make sure you change the default password on the router, and don't share the encryption key.