It is amazing how so many answers to this problem on Web fora are wrong. People giving advice should test it first.
Anyway, I found the answer in an obscure posting: it's a security bug. One can argue whether it is Microsoft's fault or Adobe's fault, but I wish they'd fix it already. Weird how days are passing and no fix has been pushed to the users.
Anyway, Microsoft changed the way that certain packages are signed with security certificates. Adobe didn't get the word, and continued to sign their releases in the same old way. The result is that current Internet Explorer browsers, versions 7 and 8, report an error for any website running Flash, and refuse to download the latest version. That is why System Restore, a drastic measure, can work. There is no fix that the user can apply. Changing user Security settings won't work. The only workaround is to switch to another browser. ANY other kind of browser.
David Spector
Springtime Software