It was enabled & reanabled. Did not solve the prob.IE 7 does support XMLHTTP! Have you disabled it?
Tools > Internet Options > Click on Security tab
A huge list of checkboxes and options will be presented. Scroll down to the bottom(Under Security). There is a option that reads Enable native XMLHTTP support. Check that. You may need to restart the browser.
OK...do u get it on other sites like gmail, orkut, etc.??
And can u post a screenshot of the error message?