Here’s a real cool guide on how to set your own Favorites folder location for IE7 in Windows Vista. Yeah, you’d probably need plenty of these tutorials with Vista since it takes the “friendly” out of “user-friendly.” Anyway, here’s the guide, courtesy of IEBlog.

• Open Windows explorer
• Create a new destination folder in an alternate location. Make sure you have full access to folders and drives
• Choose the Source Favorites folder under your user profile
• Right click on the folder and choose Properties
• Go to the location tab and replace C:\Users\\Favorites with the new drive and destination folder location (for e.g. E:\Myfavorites that you have created above)
• Click on the Move button in the select destination dialog, choose the new folder you have created in the steps above and click the Select folder button
• Say “yes” to the confirmation dialog that asks if you would like to move all your files from the old location to the new one
• Hit OK on the properties dialog

For an illustrated guide, go check my source for this, IEBlog. There are other methods like registry edits and redirecting via group policy settings.