I am having a similar problem:

I have a flash header which was working in both IE7 and FireFox2. I installed the ImageHandler2.0 mod and now my flash header no longer works in IE7.

I didn't overwrite any files with the installation, and can not find how to make the flash header work again in IE.

My site is www.victorytoner.com/catalog. (ZC v1.3.7.1)

Thanks in advance for your help!