It's all done from within Internet Explorer by clicking and dragging the bookmarks and folders into the order you want them. Two ways:-

Open Internet explorer.
Click 'Favorites'.
Open a bookmarks folder
Click and drag the bookmarks into the required order.
The order of the folders can be changed in the same way.

Open Internet explorer.
Click 'Favorites'.
Click 'Organize Favorites'.
Drag bookmarks/folders into the required order.