Steve upgraded Picasa to 3.9, but he can't authenticate it. It says it needs Internet Explorer to do it. Steve can't upgrade beyond Internet Explorer 8, either, because Windows XP won't support it. Leo thinks it uses the default browser to authenticate, which happens to be Internet Explorer in Steve's case. The way Google does authentication is that it goes out to a browser where you'd log into your Google account. The browser then gives you a chance to authorize, then it gives that application a token that it's been authorized. Leo suspects it's just calling upon the default browser to authenticate the app.
Steve says that Google Chrome is his default browser though, not Internet Explorer. Leo says he might try making Internet Explorer the default browser again, but Steve says he can't find it on his machine. Leo says to search for "iexplore.exe", but Steve still says it can't be found. Since IE is so tightly wound into Windows XP, it should be there. The fact that he can't find it may indicate a problem with Windows XP.
One possibility is that Steve's on an unsupported operating system, and Picasa may not support Windows XP anymore. Leo suggests going into the Chrome browser, and clearing the cache and history. It should work fine in Chrome. Another option if he can't find Internet Explorer is to run a Windows repair with his XP disk. It should fix all the problems Steve is having with XP.