Please stop with the "don't use IE" stuff...it's really getting old. If you think for one minute that Firefox is immune to attacks, you're mistaken. Don't get me wrong, I like Firefox. But it's not the be all and end all of web browsers, and it's not immune from hacks.
Here's just a small report of the latest:
http://www.eweek.com/article2/0,1759,1782332,00.asp
Everything is vulnerable, given the time to exploit it. When asked why he robbed banks, Willie Sutton, famous robber of the early 20th century said "because that's where the money is". Hackers attack MS software because that's where the user base is. It's just that simple. Now, that doesn't exonerate MS by any stretch. But it would be folly to think that Firefox is some impenetrable program. And the more people that use it, the more attention it will get from the nefarious types who only wish to cause ills to the rest of us.
Firefox has forced MS to update their browser, which should have been done ages ago. So, competition is always a good thing.
Now, back to the OP's problem, which is the real issue:
Any chance you have a proxy set in the connections box? That will cause you problems right away if the proxy server address is not your real internet gateway. Give it a look-see.
Also, download and run "Hijackthis.exe". Get the zip here, unzip it, and choose "Scan and create Logfile" (or similar wording). Copy/paste the logfile results from notepad here in the forum so we can see it. It will be easy to pick out programs that may be causing you problems with IE.
HijackThis....unzip it and run as instructed above
You can also do a "sfc /scannow" from the "Run" box in Windows. Don't use the quotes. Just type:
sfc /scannow
It will ask you to put the XP CD in. (if necessary, exit out of the CD's installer screen if it pops up). SFC is the "System File Checker", and will make sure all of your system files are correct, vs. being replaced by other programs. It will just bring up a little rectangular box on your screen, and when it's done, the box will disappear. Reboot when it's done.