Did you happen to download the XP SP2??
Your problem is identical to what I had experienced after
downloading XP SP2. My IE went nuts and I couldn't open
links on webpages or links sent to me via email.
However..the good news is that it is now fixed thanks to
Microsoft email support. I'm cutting and pasting the fix
below:
Step One: Clean Internet Explorer
a. Click Start, click Run, input "INETCPL.CPL" (without
the quotation marks) and press Enter.
b. Click Use blank.
c. Click Delete cookies and Delete files on the General
tab.
d. Click Clear History in the History area, and then
click OK in the dialog box that appears.
e. Click Settings, click View Objects, delete all objects
there, and then close the window.
f. Click View Files, delete all files there, and then
close the window.
g. On the Connections tab, click the LAN Settings button,
and then uncheck all the boxes.
h. On the Advanced tab, click the Restore Defaults
button, and then click to clear the checkbox
beside "Enable third-party extensions".
i. On the security tab, please click each of the four
kinds of sites in the security settings and then click
the "default level" button.
j. Click OK to save these settings.
Step Two: Scan and remove any spyware:
a. Download and install Ad-Aware from the following page:
http://lavasoft.element5.com/support/download/
b. Click Start -> All Programs -> "Lavasoft Ad-aware SE
Personal" -> "Ad-Aware SE Personal" to start Ad-Aware.
(Note: If there is a popup box asking whether or not
check definition update, please click OK and click
Connect. Click OK to download and install the latest
definition, and then click Finish.)
c. Click the Start button in the Ad-Aware window, and
then click Next to start the scan.
d. After the scan is finished, click Next, click the
check boxes on the "Critical Objects" tab to select them,
click Next, and the click OK to confirm the removal.
This will remove all found spyware objects. Restart your
computer.
For more information about spyware, please refer to the
following website:
http://www.microsoft.com/security/articles/spyware.asp
Then, restart the computer and check if this issue is
resolved.