there may be a solution, not sure what you're tried so far, this should reset the registry to save the settings again, by deleting the following 2 registry keys:
HKEY_CURRENT_USER\Software\Microsoft\Windows\Shell NoRoam\BagMRU
HKEY_CURRENT_USER\Software\Microsoft\Windows\Shell NoRoam\Bags
then set your folders as you want them.
-let me know if that does anything, if not i'll keep looking. I am a long time coder, and the registry is one of my favorite places to tamper w/ XP
