Hope someone can HELP as this problem is driving me crazy!!

I recently upgraded from Win XP Pro to Win 7 Pro (64bit). I was using and still am ZoneAlarm Extreme 9.3.014. Since Win 7 has no email program I installed Outlook 2003.

Here is my problem. When I click on the email icon in Internet Explorer 8, I get a message, “could not perform this operation because the default mail client is not properly installed.”

I set Outlook as the default mail program and all works well till I reboot, then back to same error message.

I have identified what is causing the problem. If I un-check “Virtualization” Outlook opens from within IE8 every time, even after re-booting. As soon as I re-check “Virtualization” same error.

I un-installed ZAE, re-loaded, did not solve problem. I have done a re-set, did not solve problem. I have tried different combinations of setting the default email with
“Virtualization” turned off, then back on, still the same.

What to do?????