This problem comes from a windows update that includes an unregistered dll file. This file has to do with some of the security features of your IE and in turn can cause problems with the windows update (which has to do with Active X controls) and cypher strength. I'm betting your friend can't go to any site that begins with https. The wierd thing is in IE it will still show 128 bit cypher strength, but because of that unregistered dll file it dosn't matter because it won't allow access to that part of IE. Long story short, do the following:

1)Start>Run>Type the following - regsvr32 softpub.dll
2)Next hit OK>OK again, then restart your computer

From there you should be good to go but I would suggest either creating a system restore point to get back to this state if need be, or get rid of the hotfix that jacked it in the first place. The problem is I don't know exactly which hotfix causes this.

Good Luck,

Hex