That is bad news!
From Jack Keller's website on this problem:
Fingernail Polish Remover Smell: The wine is contaminated with ethyl acetate. There are three ways a wine can become thus contaminated. (1) Ethyl alcohol and oxygen can interact to create acetaldehyde, which can react with oxygen to create acetic acid (vinegar), which in turn can react with ethyl alcohol to create ethyl acetate. This pathway can be easily shut down by preventing oxygen exposure with the wine. Since this is impossible, one can at least minimize it to what is absolutely necessary (racking, stirring, testing, bottling). This can be done by topping up adequately, using an inert gas (such as argon -- or even CO2) to sparge the new carboy of oxygen when racking, leaving the bung on the carboy except when absolutely necessary to break the seal, and keeping sulfur dioxide levels sufficiently high that no vacant molecular interstices exist for oxygen to populate. (2) Bacterial contamination of the wine (by acetobacter) can allow the creation of acetic acid, which then combines with ethyl alcohol in the wine to form ethyl acetate. The key to prevention, again, is maintaining an aseptic level of sulfur dioxide to preclude contamination and/or prevent contamination the same way oxygen exposure is prevented. (3) Finally, ethyl acetate contamination can be created by yeast under stress as well as by many bacteria besides acetobacter. In the first instance, maintaining an optimal temperature for the yeast strain employed, using a good mineral water in the must (if water is even used), yeast nutrient for non- grape wines, and a nitrogen source (Yeastex-61 or some other specialized nutrient) for yeast strains requiring ample nitrogen (see Strains of Wine Yeast) will eliminate yeast stress. In the second instance, if you follow the procedures for preventing acetobacter contamination, you will prevent the others as well.