In IE7 .swf files do not play when "allow active content to run in files on
my computer" is checked. There is an error "object expected" on the very
first line.

If I uncheck the setting they run fine, but then simple Javascript brings up
a warning message. This happens on two separate computers, so it is not
specific to a particular machine. When is MS going to do something about it.

Solution found:
http://support.microsoft.com/default.aspx/kb/934366

You may have to create the registry key itself as well as the DWord value
though.

Thanks to this site which pointed me in the right direction.
http://www.ie-vista.com/kbase3.html#vuln

Problem solved.
http://support.microsoft.com/default.aspx/kb/934366

You may have to create the registry key as well as the DWord value though.

Thanks to this site for pointing me to it.
http://www.ie-vista.com/kbase3.html#vuln