Sounds like your HTML file association is shot, try right clicking one of the shortcuts, select Open With/Choose Program Then select a browser from the list, tick the Always use selected program box and OK it.
You should be able to simply drag shortcuts from the "Favourites" menu, from both IE7 anf Firefox (don't forget to replace them in the favourites menu) When you say "The system won't allow" what is the message? I would delete all the old ones and start again.
Wish I could help, restlessquiff. I have the same problem with disabled shortcuts in WinOptimiser 07, but Ashampoo says it`s something to do with the way AOL handles links. They failed to offer any advice about how to fix it,however.