As for your favorites, make sure that they are in right folder.
If you are using XP Home, they should be in C:/Documents and Setting/All Users/Favorites.
Or, if multiple users are setup on your computer, they should be in C:/Documents and Settings/%Username&/Favorites.
See if you can find out where IE is pulling your favorites from and simply copy them into your Favorites folder in Docs&Set. Favorites are simply saved as files on your computer and you should be able to move them into the correct folder and use them for that.
And easier way may be to open Firefox, go to File>Import... then make sure MS IE is selected, click next and be sure that Favorites is selected from the list (you can also import cookies and forms and such). Then just let the wizard do its work. You can move bookmarks around in Firefox in Bookmarks>Manage Bookmarks.
Way to go on choosing Firefox!