Okay, unfortunately my free trial of ZoneAlarm just expired, but I think if I remember correctly there is an option somewhere for an adblocker. This may be set too high, as you need to allow popups to work with the site. I think it is under privacy or something, but I just can't remember. Anyway, try looking for that and see if that helps. I'll try to think of something else in the meanwhile.
I agree that it's an adblocker setting.
I have SpywareBlaster, it has option to block flash ads. I enabled this option and had experience some problems such as unable to play video, play Yaoo Launch radio on YMessenger and Yahoo Audibles appearing as a box with red X.
I disabled the option and now everythings is OK.
So check you're adblocking settings, try disabling it first, reboot and see if Y! Launch is ok.