"This operation has been canceled due to restrictions in effect on this computer. Please contact your system administrator."
This is caused by an incorrect or corrupted registry key:
The key should read:
"C:\Program Files\Internet Explorer\IEXPLORE.EXE\" -nohome
Or in the case of Windows XP x64:
"C:\Program Files (x86)\Internet Explorer\IEXPLORE.EXE\" -nohome