Address Bar URL won't resolve

IE 7 has stopped resolving any addresses to URLs that are typed into the address bar. Queries typed into the Google search entry will return the Google search results which can then be linked to just fine and the address bar displays the address. It is as if the address bar doesn't act on any input from the keyboard. This problem makes IE useless.

I have restored all the defaults and tried everything I can think of on the tools/options but nothing makes any difference.

Firefox and Opera both work properly.

 

Disabled all add-ons

I disabled all add-ons and nothing changed. XP is the OS.

I also found some other threads on another board that suggested changes in the registry. Those didn't change anything either. I've verified the settings in tools/options/advanced/search from the address bar. Everything appears correct.

I also installed the Avant browser which uses IE for its back-end. It performs perfectly. Therefore since that prove IE is running correctly, it must be in a configuration somewhere, I suspect it is in the registry.