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IE7 Creates TEMP Folder on Desktop. Why?

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I did the update to IE7. Every time I open IE7 it creates a hidden TEMP folder on the Desktop. Any ideas why? I can not find the settings to change that. My temp files are set for c:\temp\Temporary Internet Files.
Thank you.

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by kah9932

Log into the local computer
?click? on Start -> Run and type in msconfig on the General tab choose Diagnostic Startup ? Load basic device and services only.
Re-boot the computer and log in again to the local computer
Delete the folder
?click? on Start -> Run and type in msconfig on the General tab choose Normal Start-up
Log into the network and all should be OK

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