...can it be harmful to play against the hardest level? Or the softest level?

Intuitively I feel like playing against the lowest level won't really improve you at all, and playing against anything less than the highest level will just give you lower expectations of your opponent.

But recently I've been playing GNUchess a bunch and when I play the hardest level, it just mauls me. I can play ultra conservatively and stuff, and it will just set up some tactical thing 8 moves down the road. But I feel guilty if I play anything but the hardest.

So what do you think? And what do you do?

My advice is to either play a level a little bit higher than you are or to play giving him only say 4 minutes and you 30 minutes plus.

Remember that the computer will see *everything* that's 4-5 moves ahead and ends up with winning material... so you will have to continually look for ways he can win material. The computer is very materialistic and if he gains any material he will try to force home his advantage in a very systematic way.   

Yeah, I've definitely noticed that. I know a material advantage can often lead by sheer force to "positional" advantages, but the computer really does seem to just play very tactically.

Anyway, in my case there really is no "little bit higher"...in this program there is only easy (which I can beat with a little effort), "normal", which beats me with some effort, and "hard", which just crushes me laughably. I think I'm gonna time it though.

I typically start off by playing the computer but letting my cats choose my moves first.  Lincoln is a chess master so I make him play with one paw behind his back

Only a complete beginner should bother with the lower levels.  Play it on the level you feel you have a chance of winning.  If you're winning too much increase the dose. 

All Chess software attempts to give that authentic human feel by throwing the odd blunder in there on the lower levels.  Winning games like this sometimes makes you feel like you didn't really win at all.

However, as a direct result of this your ability to spot mistakes will increase, which is a very good thing. 

Well, you're not the only one who gets mauled by computers - especially in 'open positions' - where central pawns have been exchanged and there's lots of opportunity for tactical confrontations.

Its in those positions where the computer's tactical ability WILL crunch you.

But I've found that while computers may maul YOU in open positions, you can SMOTHER them in closed ones.

Aim for closed positions: few or no exchanges, lock the pawn structures when you get a chance, ultimately try to roost a knight on a central outpost and pile every piece you have in line after it. So that when the computer is 'forced' to exchange/breath you can really land heavy on that backward pawn. It won't be able to make head or tails out what you are doing while you quietly pile up pieces underneath an outpost like that.

I've seen computers make comical moves in locked, crowded positions.

good luck! (to me too)