IE7 Problems After May Security Update?

It was reported at the IEBlog that some people have experienced an unexpected “Save File” security dialog when they launch Internet Explorer. It appears that this happens if you have moved the “Temporary Internet Files” folder to a custom location and IE does not have appropriate access rights to the new folder location.
While the IE Team works to resolve the issue, use the workaround in Microsoft KB Article 937409, The "File Download – Security Warning" dialog box opens when you try to open Internet Explorer 7.