Files saved to My Pictures diverted to Temp Internet - Why?

Using ME, PIII 750, 385 RAM, 12MB of free HD space

When using MS Photo Editor and do a Save As into the My Pictures folder, the
image is always diverted into the Temp Internet File folder. That happens
every time on the first attempt after launching Windows Explorer. On the
second attempt, it only happens about 50% of the time. Someone suggested I
clear the TIF, so I did this:

1. Cleared out the TIF
2. Closed WExplorer and MSphoto Editor
3. Launched WExplorer and MSphoto Editor
4. Opened a JPG file
5. Did a Save As to a new filename, but to the same My Pictures folder

The new saved file failed to save correctly to the My Pictures folder, but
the second attempt for a different file was successful.

Repeated attempts showed that the Save As action fails nearly every time a
file is Saved on the FIRST attempt after WExplorer is launched. The second
Save As attempt works about 50% of the time.

Again, if I close WExplorer and re-launch it, the first Save As will be
incorrectly diverted to the TIF nearly every time. Successive attempts will
usually work correctly only about 50% of the time.

Is there a solution to this problem?