I'm usig a networked version of McAfee and don't see this option. I"m not sure this is it because I'm the only one on the network with this problem, but I'll check.
I wouldn't mind rebuilding my favorites folder from scratch, but this problem won't let me create new folders or import a backup while in IExplorer. When I try to go directly to my user directory and either create a new file called favorites, or cut and past from another source, I get an error message that tells me a file with this name (Favorites) already exists, but I can't see it! I've got all my hidden folders viewable, too! What now?