To fix the issue of Microsoft Internet Explorer defaulting to C:\WINDOWS\system32\msblank.html instead of the desired homepage, it is essential to check the proxy settings, as incorrect configurations may lead to such problems. Additionally, the homepage could be hijacked by malware, which is a common issue. To address this, it is recommended to use tools like Lavasoft's Ad-Aware and Spybot Search and Destroy to remove spyware. For a more thorough analysis, using HijackThis can help identify and eliminate unwanted entries. Users are also advised to consider switching to alternative browsers like Firefox for better security and performance. Manual registry editing is another option for advanced users, but caution is advised.