Thanks, Kento. I have tried to rename - there are two files of the same name found in search. First file successfully renamed 'old'. System wouldn't let me rename second file as it may be in use by other source (?) I have put them both back to Folders.dbx. Searched for *dbx. and all OK there.
I have downloaded Internet Explorer 6 thinking this might solve the problem but all is as before with the same error message. I can access email through a roundabout way - Dial networking and on to the Internet but this isn't how it should be! I feel I have tried everything now unless someone comes up with something new. Anyway, many thanks for trying.