In Sharon's dream world of Harry Barker, a Beowulf is a hacker who has become "corrupted" by rogue virtual reality software. Exactly how this corruption occurs is unknown. However, it is assumed that hackers in Sharon's dream world have become so ingrained in their technology that virtual reality is everywhere, as are other tools of the hacking trade. By whatever means this corruption occurs, a hacker that becomes a Beowulf can transform uncontrollably into a virtual reality "monster" at any time. In this state, the hacker's mind is overrun and he or she is no longer in control of their own body or actions. A Beowulf may attack and kill its closest friends without realizing what is happening. A skilled hacker can learn to recognize patterns in his or her transformations and can learn to control them to the point that they only occur at regular, well-planned intervals. However, this requires a considerable amount of skill and observation, as well as a mastery of various scripting languages.
The only known Beowulf in Harry's world is Dwayne Duncan, who became "infected" while a student at Hollerith's. Exactly how he became infected is currently unknown, but it is implied that Dwayne was experimenting with virtual reality with his friends—Nick Wellington, Jason Barker, and Petey Petagrue—and that the experiment went awry. Using his mastery of VR technology, Nick was able to help Dwayne learn to control his transformations somewhat; he then encouraged the others to create their own VR avatars to help Dwayne cope when his transformations occurred. Dwayne largely keeps his "affliction" a secret, and it is implied that few at Hollerith's knew about it when he accepted the teaching post there as professor of Defense Against the Dark Arts. Dwayne was assisted in controlling his transformations by Scott Sysape, likely reluctantly, who, as Scripts Master, was able to create protection scripts to keep his transformations in check. During the climax of "Harry Barker and the Prisoner of Angband", however, Dwayne did not properly prepare his scripts, and he transformed into a Beowulf, nearly killing Harry and his friends. Although the incident ended with no one being harmed, Dwayne was promptly fired the next day when word reached the school's board of directors, who didn't want a Beowulf near their children.
In this context, a Beowulf is similar to a werewolf as portrayed in Harry Potter. Ultimately, the name "Beowulf" comes from the Old English epic poem by the same name. Within the context of computer science, it takes its name from the Beowulf cluster, a fact Harmony explicitly mentions in the course of the story. "Beowulf" was chosen to be the analog of "werewolf" simply because of the "wolf" part of both names. (Hey, there's not many "wolf" related computer puns out there, so sue me.) When Dwayne steps in to guard Harry against a bogon, it transforms into a dragon, which is a direct reference to the Beowulf poem.