Well.
I just did a search of the Windows XP newsgroups on microsoft.com, and I heard that someone had the same problem as me, and all they had to do was get rid of the Google search bar, and IE returned to normal.
http://www.microsoft.com/windowsxp/e...&cr=US&m=1&p=1
So I thought I'd have a go, and it worked.
IE now works because I uninstalled the Google Search bar (which had been installed about 1.5 to 2 years ago). I don't understand why that happened, but IE is now working, and I'm elated.
For reference I've posted this solution in all of the threads I have created.

The problem does not appear to be Google toolbar per se but a malware corruption of the software.

Reinstallation should be fine.

http://groups.google.com/group/micro...e+error&qt_g=1