as per Microsoft; http://support.microsoft.com/kb/929200
After you install Windows Internet Explorer 7 on a computer that is running Windows XP with Service Pack 2, a "Restore My Active Desktop" button appears on the desktop
To resolve this problem, follow these steps:
1. Click Start, click Run, type regedit, and then click OK.
2. Locate and then click the following registry subkey:
3. In the right pane, right-click DeskHtmlVersion, and then click Modify.
4. In the Value data box, type 0, and then click OK.
5. Exit Registry Editor.
6. Log off from Windows, and then log on. The Restore My Active Desktop button has been removed.