I've just solved a very similar problem by simply removing the Windows Journal Viewer program. It was supplied as a download by Microsoft last year to let you read journals prepared on Microsoft Tablet XP machines so most people don't need it.
Specifics of my case: XP Home on standalone PC set up for several users. When I updated to Acrobat 6.01 reader, it worked fine on my account apart from refusing to integrate with IE. However it failed everytime on my wife's account as per Mark's description above. On investigation found that the same problem occured if launching the Journal Viewer on my wife's account. Following deletion, no further problems.
Hope that helps.
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