After applying following Group Policy setting, users are unable to organize favorites in Internet Explorer 8.
User Configuration->Administrative Templates->Windows Components->Windows Explorer ->Prevent access to drives from My Computer (Restrict C drive only)
IE favorites location is under C:\Documents and Settings\*USERNAME*\. When above GP is enabled, it is the expected behavior.
In the registry, the IE favorites location is set below:
[HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders]
Redirecting the users Favorites may not be a solution for every environment, as we don't have it included in IE Policies or Folder Redirection policy for a good reason. There’s no existing policy to set this location. We have to either write own ADM file or script file to modify the registry.
Based on previous inquiry regarding same scenario, be aware that redirection of the Favorites, History, and Cookies could cause other performance issues on the client where IE behavior may not function correctly and therefore they should not be done without testing on your part to determine whether or not the product performs in the manor that is acceptable to you. That is why there is no UI Option to change these folders and that is why there is no GPO to set these values.
The redirection should never occur to a Network Drive. For Example: If History and Cookies are redirected for every Cookie that is created or retrieved and every page that is navigated to, it must be saved / retrieved from a Network Resource which may or may not be available and thus cause additional network traffic that would not normally happen and would impact the performance of the client.
But if you have only one driver c: and need to enable “Prevent access to drives from My Computer-> Restrict C drive only” in your domain, network driver may be workaround for organize favorites.
Please keep in mind, when the redirection is to a network drive, user still has problem to organize favorites if it is not in the domain. User roaming profile seems to have similar issue and it needs to access to C driver as well.
Finally, whatever change to this favorites location, it must be fully tested in your environment. Also, the entire risk arising out of the use or performance remains with you.