I have come accross this issue a lot of times and this is happening because of a bad browser helper object in IE. to remove this u need to run the BHOdeamon. But U will not be able to go to that because IE would freeze!!! as a small workaround.. do the following first...
-->Start-->Control Panel-->Internet OPtions
Click on the advanced tab
here uncheck "Enable third Party Browser extensions(requires restart)" option and then click ok and restart the computer. Now You would be able to connect to the internet.
Go to www.definitivesolutions.com and download bhodeamon and run it. It will give you a list of BHO;s found on your computer, double click on each of them and select disable. and then close that window. Restart the computer. Go to internet options and put a check back on the enable third party browser extension again (this is important as the other gud Bho's should work)
After this your IE should work fine. As a precaution you can run this wonderfull online spyware utility and remove all those crap sitting on your computer...
its www.spywareinfo.com/xscan run it from the site and that wud do wonders.....
all the best