Your problem is not with Internet Explorer, but with Windows Explorer, your User Profile (quite possibly the Links Folder), some other Vista Files, or something else (maybe even malware) - I'm not sure. The items in the Favorites come from the Links Folder - there is no default setting to include Computer or any other location in any of the dialog boxes or in Explorer. In theory, if you deleted everything from Links, they should all be empty.
First, with only 2 entries in Links, you're missing at least the desktop.ini file (which isn't a link but is part of the folder) - at least my folder includes that file. Go to Start / Control Panel / Folder Options / View and mark the button that says show hidden files and folders, uncheck the box to hide system files, and uncheck the box to hide extensions of known file types. Now examine that folder again and see if the desktop.ini file is there. I'd love to see it but I won't be able to understand it as it's in a foreign language I don't know. Are the two entries that are there the ones we just added to Internet Explorer and does desktop.ini now appear? I have absolutely no idea why under these circumstances those aren't the only two entries showing up everywhere (or why the others disappeared) - both in Windows Explorer and in the save dialog boxes. I tested it on my system and it added the Download Folder to the Links Folder and to all the dialog boxes and to Windows Explorer Windows but deleted nothing and adding to the Links Folder created no duplicates. Check the entire User Profile folder (and the sub-folders in it) to see if there is ANOTHER Links Folder existing (but maybe moved) - if so, the existence of two is almost certainly the cause of the problem and we need to find a way to combine them and make sure there is only one.
If that doesn't work (i.e., if you can't find another folder), do a complete search of your C: Drive for the/another Links folder (it may not be green like the other one but if it is named Links and contains shortcuts it is probably what we are looking for no matter where it might be). To search the entire C: drive in Vista go to Start / Search Box and type in ‘<filename> or <foldername>’. As you're typing you'll see two hyperlinks appear just above where you're typing and one will say Search Everywhere. Click on that. That will do a quick indexed search and bring up a dialog box. Click on Advanced Search. Click on the location drop down menu and find Drive C: and click on it. Check the box "include non-indexed, hidden, and system files (may be slow)." Then click on Search. You will now be searching your entire hard drive for the specified file. And yes, it's not a very efficient way of searching the entire drive for a file but that's how it's done in Vista. If you find it, open it and include a screen image in your next reply and tell me what it includes and exactly where it is located (the full folder path name - e.g., C:\Windows\System32\Fonts...). If a second one doesn't exist and with the problem being what it is (it is NOT an Internet Explorer problem - that issue has been solved - this is something else that I'm not at all certain about and does not belong in this forum but where people who know more about this type of thing go to offer help), please repost your last question (your last post) with the screenshots AND answers to the questions above to the General Discussion Forum General Discussion - Vista Forums. You should be able to just copy and paste most of what you've already written though you will probably need to re-add the screenshots (and the other information and remove the initial comments about the problem being solved and directiing the question to me so anyone reading it isn't confused by that or fails to respond because they think you want me specifically). I will probably reply there as well but possibly not at first so that someone else (or several other people) will see and respond to it, but I'm hoping others also see it and reply to it with some suggestions as at the moment I'm a bit confused by the situation - I have several thoughts but unless there's a duplicate as noted above they're primarily just guesses at this point and I'm hoping for something a bit more concrete. If you don't get any replies after a while, I'll reply anyway and we'll do our best. I hope this helps. If not, reposting should at least bring it to the attention of people who are more knowledgeable about and experienced with this type of issue (not this one specificially - that's pretty unique - but with Windows Explorer and profile and general Vista issues). Good luck!