Right-click My Pictures folder "Cut" and "Paste" to the target directory. The My Pictures [and it's registry entry] are redirected automatically.
Windows XP stores the location of per-user special folders (including favorites path) here:
[HKCU\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders]
Alternately, you can change the path there. Or, use TweakUI and change the location of Special folders.
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