Hello Kate!
Yeah, be sure and make backups, restore disc's (if you didn't but the retail version of windows 7) and keep system restore going, because you'll never be able to keep those little fingers from touching something

- and it's always easier to have it ready to replace! You say the system restore point you tried to use produced an error, thats not a good thing. Have you had other anti-virus software installed in the past and subsequently uninstalled it possibly? That could be one possible source of the error. Did it produce an error code # or anything tangible for me to be able to help track down the problem. You should have more restore points available, and I guess it is possible that the one had a issue. Also what anti-virus software are you using now.
And as far as the Caret Browsing, It's a feature so you can use the keyboard to jump to different parts of the web page (links and forms, etc.) to be able to navigate without the luxury of a mouse, although in your case it you don't need it, and I find it strange that it WAS turned on in IE, so it seems like was right about the cause, but then you say your "primary browser" Mozilla FF is still acting that way, and while I'd bet it has a similar functionality, I don't know how they would both get turned one at once!? I don't have Mozilla in front of me now, but If this doesn't help, I'll try to get that answer for you. First make sure it's not an Accessibility feature:
To enter the Ease of Access Center:
You should be able to simply press

rb: then in the search-box type "Ease" and press enter. Most of the way down the window there should be a link titled
Make the keyboard earlier to use. Click on it, and the next window should have a bunch of check-boxes. make sure they are all unchecked. This features can cause some people all kinds of problems, and may be the source. Click [OK] and see if it helps at all.
Try that and let me know if there's any change. Otherwise (1) remember to answer the anti-virus question(s). (2) confirm that IE is working fine while Mozilla FF is still acting the way you mentioned before.
Hope to hear back from you soon, good luck!
Mike
Addition: Actually I checked out Foxfire and in the newest version I just downloaded (hopefully the same in what you've got, or else you might want to upgrade anyway) I used the
Alt key to bring up the menu, if it isn't already visible, then opened the
Tools menu and selected
Options from the bottom. The Options window has a row of images/Icons across the top of the screen, with the right-most looking like a gear and titled
Advanced. Click This to bring up the Advanced options, which should consist of four tabs. The first one titles
General SHOULD already be selected (if not click it to open it). The top section of the tab should be titled
Accessibility with three (3) check boxes inside this area. The First one should be titled "Always use the cursor keys to navigate within the pages" Make sure that this item is NOT checked. It is basically the equivalent of Carat Browsing in Internet Explorer. Make sure if you do make any changes (check/unchecked boxes) that you press [OK] at the bottom of the window (as cancel will void any changes made). It should take effect immediately, although restarting the browser is always advisable to be certain.