Thanks for the reponse MM, and yes still not functioning for downloads but works properly for addon, activeX and popup blocking notification. Rechecked IE seccurity settings and have prompt for downloads enabled.
Turned off SmartScreen Filter temporarily but still no change. Thoght maybe latest Security updates for IE 8 might reset something but no. Scanned with MSE, MSRT, MBAM, SAS, IOBIT, HitmanPro, DrWeb Cureit and EmiSoft. Used Revo uninstaller, CCleaner and RootRevealer as well. Can't think it's a malware problem.
Did you have asuggestion?
rhab