This is my prefered fix. Here is a lengthy document on how to fix the issue by running Regedit (method 1)http://support.microsoft.com/kb/894510
Alternatively here is another articlehttp://windowsxp.mvps.org/err1324.htm
Please read this and follow the link to "Reset the Shell Folders paths to defaults". From there there is a link on how to backup the registry. Very advisable that you do this before editing the registry. There is a lot of info on that last page. What you need is the regfix. Right click on the following link and "save as". http://windowsxp.mvp...hellfolders.reg
once it's downloaded just double click on the file. It will prompt you about modifying your registry. This is what we want to do.
This alternative fix will reset your shell folders back to default. It may actually be easier and simpler to follow Method 1 in the microsoft article to fix the "specific issue" without resorting to reseting all of your settings.
Please let me know if you have any questions.