If you use the Search of these forums, you'll find that a procedure has helped many avoid reinstalling the OS to fix IE.

Here's the method.

1. Download IE60.exe from evolt's browser archive.
2. Use IERADICATOR to remove IE/OE
3. Use IE60.exe to install IE 6.0
4. Run Windows update.

http://www.experts-exchange.com/Operating_Systems/WinME/Q_20998066.html duplicates this advice.