Dreamer, you are correct on that. Bad eggs can be generated numerous ways, but it's always caused by a checksum error, which ends in the corruption of the Pokemon's data, causing it to become a bad egg. There is no need to worry if you're a PokeGen user, though. A PokeGen user can always go back and fix the errors, or remove the Pokemon (in which case, the bad egg) from its slot completely.
If you want more information on "Bad EGGs," I'd recommend visiting this link: http://bulbapedia.bulbagarden.net/wiki/Bad_egg
