I tried to follow your directions for Windows Explorer, but I have version 8.0 and it does not have Folder Options listed under Tools. I usually use Firefox, but it also does not have Folder Options listed under tools.
I have uninstalled the newer versions of Adobe Reader (I've tried both 8 and 9) and gone back to Adobe Reader 7, but still have been unable to get anywhere.
I just realized that your message is from 2007; since everything has changed since then with Internet Explorer and Adobe Digital Editions and Reader, I'm not sure what to do. Does anyone have any updated information, since Adobe announced in that they changed everything near the end of March 2009?