Below are shortcuts to install the Microsoft Active Desktop update on Windows 95 with IE 5.x. As for all shortcuts, there is a small risk involved. These instructions should work well on most Windows 95 configurations, but...
Use at your own risks!
Installing the Active Desktop Update along with IE 5.5 SP2
You can install the Active Desktop Update on Windows 95 along with IE 5.5 SP2. The option exists, but has been hidden because it must not be installed on Windows 98 or newer (already included). Here's how to proceed:
1- Download and run ie5setup.exe (or run that file from your downloaded package or CD).
2- When the License Agreement appears, a folder \Windows\temp\ixp000.tmp will be created. Download iesetup.inf in that folder, overwriting the existing file. This step is necessary to update the location of the files needed from the net to proceeded (but not if you are working from a full package or CD).
3- Locate iesetup.cif in the \Windows\temp\ixp000.tmp folder and open it in notepad.
4- Under the item [IE4Shell_Win], find the line that says UIVISIBLE=0 and change it to read UIVISIBLE=1, then save the file. This will enable the hidden Active Desktop Update checkbox in IE's installation program.
5- Go back to License Agreement, check "accept" and click the Next Button, then choose Install Minimal or customize your browser and click [Next] again.
6- You will now see the Windows Desktop Update option immediately under Internet Explorer 5.5 Web Browser. Check both and select the other components you want, then proceed with the installation as usual.
Installing the Active Desktop Update with IE 5.x already installed
There are several ways of doing this. There is the long and cumbersome Microsoft way, which is to uninstall IE 5.x, install IE 4.01 with the active desktop update, then reinstall IE 5.x. Lots of fun on a dialup connection!!!
Or... You can just download the update itself, which is less than 1 MB, and install it (duh!)
If you prefer the second way, do as follows:
1- Download the update Ie4shl95.cab and extract it to a temporary folder. Most archive programs such as Winzip or Winrar can handle the .cab format. You should just double-click the file and see what comes up. If you have no archiver currently associated with the .cab format, you can download and install the small Microsoft Cabviewer. To install, simply run cabview.exe to extract the content, then right-click cabview.inf to install it. You will be able to see and extract the content of .cab files from Windows Explorer now.
2- After extracting Ie4shl95.cab the temporary folder should count 26 files, 27 if you extracted in the same folder where you had Ie4shl95.cab. Locate ie4shell.inf, right-click it and select Install. If a message pops up complaining of a missing file Wallpapr.htm, just ignore it. Restart your computer as instructed.
3- When windows is back up, it is likely that your start button won't work at this point. To correct this, you'll need to execute a "repair" of your Internet Explorer. To do so, open My Computer, then Control Panel, and then Add/Remove Programs. Now select Microsoft Internet Explorer from the list, then click the [Add/Remove] button and select the repair option, then click [Ok].
4- Now reboot again, and you are done!
Note: This update will replace explorer.exe in C:\Windows with an updated version (4.72.3612.1700) and you cannot go back.
Note: If your desktop icons look garbled, you'll need to repair them. If you don't already have it, i suggest you download and install Tweak UI 1.33 and use the repair tool in it.
Courtesy of: Lightspeed's Windows 95 Page