An Internet shortcut does not display the correct icon in Internet Explorer 7
Consider the following scenario. You create an Internet shortcut. When you create the Internet shortcut, you specify the icon path of the Internet shortcut. The icon path of the Internet shortcut includes a system variable. For example, you create the Internet shortcut by using the following code.
[InternetShortcut] URL=http://www.microsoft.com/ IconFile=%systemroot%\test.ico IconIndex=0
In this scenario, the Internet shortcut does not display the correct icon. Instead, a generic icon is displayed.
Note: This problem occurs on computers that are running Windows Internet Explorer 7.
For more information on this issue, including potential causes, workarounds, and resolutions, see: Microsoft KB Article KB935779.

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