Share your Internet Favorites with other systems in a Workgroup

If you want to share your Internet shortcuts (Favorites) with the other computers in your Workgroup, follow these instructions:

Requirements: Any PC running a Windows Operating System with File and Printer Sharing enabled. Additionally, if you want to synchronize the Favorites, Windows XP Professional is required. 

Decide which computer must host the Favorites (Source computer)

If the Workgroup contains 10 computers, decide which computer you want to designate as the Host. Hint: Choose the computer which will be ON always or most of the times, for high availability of Favorites for other systems.

Share the Favorites folder and give Full Access to the share

Depending upon the Operating System installed in the Source Computer, right-click the Favorites folder and Share it (give Full Access rights for this share). Note that you may need to install File and Printer Sharing for Windows 98/ME systems additionally.

In other systems, map a drive-letter for the shared Favorites folder

From other Workgroup systems, access the Favorites share of the Source Computer and assign the same drive-letter (say Z:\ ) in all the computers, for uniformity. 

Change the Favorites Shell Folder paths in the registry for the other computers

For each computers in the Workgroup (except the Source Computer), change the User Shell Folders path in the registry for Favorites. This has to be done in the following registry key:

HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders

Set the value of "Favorites" to "Z:\"

You may try FolderRedirector utility to automate the process.

Now, open an instance of Internet Explorer to verify that the Favorites list is read from the Source Computer's Favorites list. You're done now. The next step is to keep the Favorites synchronized.

Make use of Offline Files feature to Synchronize the Favorites (this part requires XP Professional)

Offline Files in Windows XP Professional can help you be more productive. You can use this feature on a portable computer, or on a desktop computer that occasionally connects to your workplace network. For example, this feature is useful if you are working at home on a desktop computer, and need to automatically get files off the network whenever you connect.

The files that you select are automatically downloaded from shared folders on the network and stored on your computer. When you disconnect, the files are available to use. When you reconnect to the network, your changes are added to the files on the network in a process called synchronization. If someone else on the network made changes to the same file, you can save your version, keep the other version, or save both.

Well. To enable Offline Files feature for the shared Favorites folder, type Z:\ in the RUN dialog. Click Tools, Folder Options and click Offline Files tab. Enable the following checkboxes:

If your Source Computer is unavailable, the other computers use the cached (Offline Files) favorites instead. Same occurs if the other computers are disconnected from the Workgroup. 

To launch the Synchronization Wizard manually, type mobsync in the RUN box and synchronize the Offline Files Favorites whenever you want. You can also configure the system to Sychronize the Offline Files when the system is idle. Wonderful features!

References and additional reading:

How to use offline files in Windows XP
Windows XP Professional: Use Offline Files When You're off the Network
Reset the Shell Folder paths to defaults