dark_15 writes "The latest patch for IE7, which fixed several bugs has apparently introduced a new problem for users. According to Network World, after patching a machine the user is presented with a 'File Download — Security Warning' dialog box when they restart IE7. When a user closes the dialog box, IE7 refuses to start.
The bug shows up when a user has moved their Temporary Internet Files folder from its default location. IE7 does not seem to have the correct permissions to read the Temporary Internet Files folder at the user-specified location. There is some speculation that the phishing filter inside that directory is the root cause of this issue.
Microsoft has responded with two workarounds which involves moving the Temporary Internet Files folder back to the default location, or by resetting the permissions at the new location."