I can find no precident to your problem. I do see some issues with the Favorites folder and BHO spywares. You might want to run HiJack This just to check:
HiJack This
Your point about the registry is a good one but searching my own I can find nothing under IE that directly informs favorites. My favorites are in C:\Documents and Settings\Administrator\Favorites
Whereas system32 is under C:\WINNT\System32
One thought is to Export your favorites (if you can), or backup C:\Documents and Settings\Administrator\Favorites then re-install IE6.
Here are some tips towards that process:
Exporting favorites:
Open Internet Explorer, click the File menu, click Import and Export. The
Import and Export wizard will open, click the Next button, click Export
Favorites, click Next, the Favorites folder will be highlighted, which means
that the Favorites folder and it's subfolders, if any, will be copied to one
file named bookmarks.htm, and the default is that the file will be placed in
your My Documents folder (unless you change the path), then follow the rest
of the wizard which will end with a dialog box that says the Favorites were
successfully Exported. If you want, you can copy or backup that
bookmark.htm file. When you want to restore your Favorites, or import them
to another system, use the same Import Export wizard, this time select
Import Favorites, and then selecting the option to Import from File or
Address, and give the path to the bookmark.htm file (if you've put it
somewhere other than the My Documents folder, such as a floppy disk, or a
CD-R/CD-RW etc.)
And then: (from kellys-korner)
"What you need to keep in mind, if you use the method described here:
How to Reinstall or Repair Internet Explorer and Outlook Express in Windows
XP
http://support.microsoft.com/default...;EN-US;q318378
Which can be automated by using this edit:
Enable Reinstallation of Internet Explorer or OE (Line 114)
http://www.kellys-korner-xp.com/xp_tweaks.htm
Is to rename the CatRoot2 (Windows\System32) folder then go to:
Go to Start/Run, and type :
"rundll32.exe setupapi,InstallHinfSection DefaultInstall 132
%windir%\inf\ie.inf"
And then re-install:
Download Internet Explorer 6 Service Pack 1