On my system, the only option in that section is notepad when i try to change the editor programs.
You can also use TweakUI to set any editor you want. Just start up TweakUI (assuming you have it installed) and go to the Explorer section, there's a spot in there somewhere to change the editor (not exactly sure where, I'm at work away from my XP box at the moment).
ok this drove me nuts all night, i know this thread is old but this info should be on here, the fix is this: delete your cache, close all instances of explorer and restart. the temporary internet files folder, when at maximum will disable the edit feature across the board -- emails in outlook and non-local files in IE. more info is explained here http://www.mredkj.com/tutorials/tips_ie.html