It seems that Microsoft added the upgrade to Internet Explorer 7 to the automatic upgrade feature of Windows XP. Automatic Updates will notify the user that a new version is ready for download giving the user the option to Install, Don’t Install and Ask Me Later. It seems a pressing matter to Microsoft to get a large basis of Internet Explorer 7 users in a hurry to regain lost grounds in the waging browser war against Opera and Firefox.
Many users that use Firefox or Opera do not care about the new Internet Explorer 7 – which means they probably want to get rid of this message altogether. Blocking windows update from automatic updating to IE7 can be done by changing one registry key in the registry. All you need to do is create a new registry file and import it to the registry
Create a new textfile, paste the following lines of code into it and save it with the extension .reg
Windows Registry Editor Version 5.00
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Internet Explorer\Setup\7.0]
"DoNotAllowIE70"=dword:00000001
This creates a new registry key that blocks the automatic update to IE7, you will not see the annoying windows that popups again. Simply change the registry key from 1 to 0 if you want to see the window again to update to the new IE7.
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Actually Microsoft caved in to businesses scared of bugs and released an official blocker (haven’t tried it yet myself though)
http://tinyurl.com/wamx8