It seems to me that Internet explorer is searching for your kernal32.dll file and can't find it. Its possible it was over-written some how. You should be able to copy it back into the windows system directory from your Windows System Cab files which are stored on your installation CD.
I hope you can solve this problem without having to reinstall the whole system,but sometimes thats the best thing to do with Windows.
Nah - if kernel32.dll didn't exist, the system wouldn't even boot into Windows. Everything uses kernel32.dll including Windows itself - basically it "is" Windows, or a large part of it.
An error in a DLL does not necessarily mean there is a problem with that DLL - it can also mean that something is feeding it bad data. DLL's are libraries of functions and subroutines that other programs use and if those programs pass invalid data into the functions and subroutines, you get errors from the DLL, but the problem actually lies in the program using the DLL, not the DLL itself (although theortically it should be robust enough to catch the invalid data and handle it gracefully, but that's another story).