I made a new user ID and logged in that way, it worked so it seems the preferences were corrupted.
Try making a new ID (IMPORTANT: MAKE SURE that you give it ADMIN rights). Login using it. If iIE works, delete your old user ID, then go into the users folder and delete the folder of your old user ID and recreate it.
You may be able to just trash the IE preferences, in fact, that's probably the easiest way of fixing it, but I am just telling you how I got it to work again.