We've kinda wandered off-topic, Tech, but I do appreciate your trying to help.
Favorites folder is right where it should be (under Docs & Settings/Michael/), but anything in there (or in Favorites menu) simply points to the folder item, not to a URL. Even "Add to favorites" while on a site simply adds a new entry there with the same characteristics.
I can browse just fine if I can copy the addy into the address bar, but of course some addys are fairly complex. So I strongly suspect the problem's in the registry, since my reg cleaner (I won't name it) is no longer as safe and conservative as it was in earlier versions, when I'd gotten lulled into using it without making backups.