Here's some more info on the favicon problem that seems to still be present in IE7.
After turning on my computer this morning, I went to my favorites and the favicon for the Channel9 bookmark had disappeared. I then launched the Channel9 page by clicking on the favorite and the favicon did NOT appear in the left of the URL entry box either. I next launched a new tab and went to Channel9; still no joy. I then launched a new instance of IE7 and went to Channel9. The favicon then appeared in the URL area and it is also showing in my favorites, even though I did not book mark it again from the new instance of IE7. In other words, I currently have 2 instances of IE7 running, one is showing the favicons OK for channel9 and the other instance does not show them. The instance that is not showing the Channel9 favicons is correctly displaying favicons for some other sites but not all the sites that it should.
Unfortunately, just like with previous versions of IE, the appearance of favicons seems to be hit and miss for no apparent reason.
BTW, Opera and Firefox are still displaying all favicons without problem.
IE7.0.5700.6 with XP Pro v5.1 (Build 2600.xpxp.050301-1521:Service Pack 2).