i think the trick is to know which part of the registry holds the "other" section of "my computer" it's a was a pure uninstall for 8.5 then installed 2009
Actually... no...
You would have to find out which IShellFolder Implementation is adding that object to the shell namespace, retrieve the CLSID of that object, do a reverse lookup in the registry for the InprocServer32 that instantiates it, and then all you've done is determined what is creating it.
It does sound like a missing DLL still listed as a Component Category for Shell Extensions...
Alright...
It is a shell extension that Windows Live Installs. Try this-
you'll need to locate the extensions file. On my computer it is: "C:\Program Files\MSN Messenger\fsshext.8.1.0178.00.dll" (I'm using Messenger 8.1). the "fsshext" part will likely be the same on your version; if there is more then one, you should probably try this with all of them...
once you've found this file- you need to unregister it:
create a new Command Prompt window- Start->Run (search) cmd <enter>
replace the file with the path/filename of the fsshext file you found in the following command:
regsvr32 -u "C:\Program Files\MSN Messenger\fsshext.8.1.0178.00.dll"
a confirmation dialog should appear. If you don't want a new Sharing folder appearing after you reboot from the latest version, you can rename the latest numbered version you find to another name- when I need to do something of the sort, I just tack ".old" to the end of the name.
You will likely need to reboot for the icon to disappear now. I hope this works for you.