Internet Explorer (IE) is Microsoft's browser, which has been known to win the first browser war over Netscape, by bundling it with Windows. Thereafter they started implementing non-standard features, such as ActiveX, to keep out competitors in the second browser war. IE is now down to about 60% in market share.
In IE7 on Windows XP the bookmarks are placed by default in "c:\Documents and Settings\<username>\Favorites". This is the folder that needs to be included in a backup if necessary.