IE8 won't open links if not already running

Windoes XP Pro, SP 3, IE8.

After upgrading to Internet explorer 8, the user reports that when clicking on a link in an Outlook email message, IF IE8 isn't running, that he receives an error and then IE opens to a blank page with a tab that simply says "Connecting..."    However, if IE8 has already been started, then the link works correctly.  It doesn't matter what link.  To attempt to isolate the error, I tried it from the Start, Run menu, and I get the same results as the user does from within Outlook.  The text of the error message appears in the CODE section, below.

It may be worth noting that the IE8 upgrade was part of the regular windows update procedure, not a manual install.

It appears from the text of the error message, that Windows isn't aware of IE8 unless it's already running.  Could this be an unregistered .dll?  If so, which one or ones?

Also, worth noting is that I can reproduce this behavior on my own PC, also running Windoes XP pro, SP 3

Thanks!
Windows cannot find 'http://www.yahoo.com'.  Make sure you typed the name correctly, and then try again.  To search for a file, click the Start button, and then click Search.

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dcmathisAsked:
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johnb6767Commented:
Have you looked at the file types in My Computer>Tools>Folder Options>File Types, and looked to make sure that the following file types are registered ok?

.LNK
(NONE) URL: FTP
(NONE) URL: Gopher
(NONE) URL: HTTP
(NONE) URL: HTTPS

For the action 'Open'.....

Application - "C:\Program Files\Internet Explorer\IEXPLORE.EXE" -nohome
Use DDE Checked
DDE Message - "%1",,-1,0,,,,
Application - IExplore
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johnb6767Commented:
Also, a common fix in the older versions was to reregister ole32.dll

start>run>regsvr32 ole32.dll

Make sure all apps are shut down of course....
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dcmathisAuthor Commented:
The links in the Folder Options menu are set up correctly, however, they don't specify FTP, HTTP, etc., they actually spell the protocol out.  Not sure if that's important or not.  

Re-registering ole32.dll didn't make any discernible difference.

Thanks for trying.  Any more ideas?
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johnb6767Commented:
"however, they don't specify FTP, HTTP, etc., they actually spell the protocol out"

Sorry, was trying to type fast.....

Have you tried a simple repair of IE8? I the Advanced Tab of IE Options.....
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mgrillCommented:
My exact same problem with IE8 and Vista Utimate in SP1 and SP2.
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dcmathisAuthor Commented:
johnb6767:  I don't see a "repair"option under the advanced tab in internet options.  There is an option to "Restore Advanced Settings," and one to "Reset" to factory.

mgrill:  Well, at least I'm not alone.  I'm also seeing this behavior on other user's computers.  I'm not sure how widespread it is, yet, but it bears watching.  Right now, it's a minor annoyance, but those have a habit of becoming major issues, depending on the person being annoyed.

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johnb6767Commented:
Sorry' use the "Reset"
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