Problem solved...
Short version is that my personal settings for IE don't work with the new update. I also seem to be experiencing the same problem with a Vista laptop. These settings delete history on exit leaving favourites temp files, cookies and form data untouched. The new update doesn't behave the same with these settings. I ran the "reset IE" option in the advanced tab and using the defaults all is well. Change the settings back to my custom ones and it fails.