Now that Windows XP SP3 has been made publicly available and you must be ready to install it, there are few things to be noted related to Internet Explorer and XP SP3. IE Blog has posted about it in details:
" Internet Explorer 6 Users
XPSP3 will continue to ship with IE6 and contains a roll-up of the latest security updates for IE6. If you are still running Internet Explorer 6, then XPSP3 will be offered to you via Windows Update as a high priority update. You can safely install XPSP3 and will have an updated version of IE6 with all your personal preferences, such as home pages and favorites, still intact.
If you are currently running IE7 or IE8 on Windows XP SP2 (XPSP2) and you are thinking of upgrading to XPSP3, read on.
Internet Explorer 7 Users
If you are currently running IE7 on XPSP2, Windows Update will offer you XPSP3 as a high priority update. If you choose to install XPSP3, Internet Explorer 7 will remain on your system after the install is complete. Your preferences will be retained. However, you will no longer be able to uninstall IE7. If you go to Control Panel->Add/Remove Programs, the Remove option will be grayed out.
This behavior is by design and here is why. When we install IE7 on Windows XP SP2, we backup the existing IE6 files in an uninstall directory. Those IE6 files are the ones that shipped on XPSP2 plus all the security updates you’ve installed while using IE6. Windows XP SP3 contains a newer version of the Internet Explorer 6 files. If you have XPSP3 on your system and uninstall IE7, your system would revert to the backed up (older) version of the IE6 files rather than the newer XPSP3 version. You would end up in a mixed file state in Windows where most files would be the upgraded XPSP3, except for the IE6 files restored when uninstalling IE7. This state is not supported and is very bug prone. To ensure a reliable user experience, we prevent this broken state by disabling the ability to uninstall Internet Explorer 7.
If you must uninstall IE7 after you have upgraded to XPSP3, then you have to first uninstall XPSP3, and then uninstall IE7. After this series of uninstalls, you will be reverted back to a XPSP2, and a stable version of IE6, so feel free to upgrade to XPSP3 again.
If you install IE7 after you install XPSP3, then you will be able to uninstall IE7 at any point and be reverted to the newer IE6 version that ships in XPSP3. The restriction on uninstalling only applies to when you install a Windows Service Pack release on top of a standalone IE release.
Keeping this in mind, you might want to uninstall IE7, upgrade to XPSP3 and then install IE7 again so you can uninstall IE7 in the future if need be.
Internet Explorer 8 Beta 1 Users
Installing IE8 Beta1 on Windows XP SP3 is fully supported, so go ahead and upgrade your computers to XPSP3 and then install IE8 Beta 1 to try out our new features. You will be able to uninstall IE8 Beta 1 at any point to revert back to either IE7 or IE6 depending on what you were using before.
However, if you already have IE8 Beta 1 installed on XPSP2, Windows XP SP3 will not be offered to you via Windows Update. This is because after you update your system to XPSP3, you will no longer be able to uninstall IE8 Beta 1 and the Remove option will be grayed out under the Add/Remove programs in Control Panel. The reason is the same as in IE7 case described above. Since people are more likely to uninstall beta software, we strongly recommend uninstalling IE8 Beta 1 prior to upgrading to Windows XP SP3 to eliminate any deployment issues and install IE8 Beta 1 after XPSP3 is on your machine." (Source:IE Blog)
I tried this and this is what happened, when you install XP SP3 on an already installed IE8 Beta1 machine, there's no Remove option.