Have you scanned your system for viruses/spyware/trojans lately? Thats very strange. IE usually doesn't change icons on their own unless something got corrupted.

I suggest a scan/defrag.

I know everyone hates to do that. :)

torrents = not a good idea. (mho)

By your screenshot it looks like something is associating it's self that's causing that problem you need to remove it. And set it back to default settings. Not sure how it's done in IE7 as I use Netscape & Firefox.