When you boot into Safe Mode, be sure your booting into Safe Mode With Networking, normal Safe Mode will not allow you to access the internet.
The reason there is only 3 icons is maybe your profile became corrupted and Windows loaded a Default Profile. Go to C:\Documents and Settings and see if there the old profile is there. You can create a new User Profile in Control Panel and copy the My Documents, Favorites, and Desktop folders to the new Profile. Log out of the profile your in and log into the new profile.
As for IE, Go to Start/Run and type appwiz.cpl and press enter. In the Add Remove Programs uninstall Windows Internet Explorer 8. It will roll back to IE7, reboot into Normal mode and see if that works.