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The "File Download-Security Warning" dialog box opens (Microsoft Windows Vista->System issue)
Symptoms:

After installing update KB931768, a File Download – Security Warning dialog box may open with the message referring to the "navcancl.dll" file name and stating "Do you want to save this file?" when trying to launch Internet Explorer 7.

Cause:

This issue may occur if one of the following factors is true:

1. The "Temporary Internet Files" folder is moved to another location.
2. The permissions for the "Temporary Internet Files" folder have been changed.

Let's try one of the following two methods below to resolve the issue:

Solutions:

Method 1: Move the "Temporary Internet Files" folder back to its original location
============================================================
1. Click the Start Button, type “inetcpl.cpl” (without quotation marks) in the Start Search box, and then press Enter.
2. In the pop up window, select the "General" tab, then click Settings in Browsing History area.
3. Click Move Folder.
4. In the “Please select a folder to which you can add items” navigation pane, locate the following folder:

C:\Users\User_Account_Name\AppData\Local\Microsoft\Windows

Note: I assume that Windows Vista is installed on the C: partition. If Windows Vista is installed on the D: partition, the above folder should be located at D:\Users\User_Account_Name\AppData\Local\Microsoft\Windows folder. Also the " User_Account_Name" refers to the user name of your account. For example, if the user name of your account is "Bill", the folder should be C:\Users\Bill.

5. Click OK two times to save the settings.
6. When the following message is received, click Yes: "Windows will now log you off to finish moving Temporary Internet Files. Do you want to continue?"
7. Restart the computer and log on to Windows Vista again.
8. Check whether the issue persists

Method 2: Grant permissions to the "Temporary Internet Files" folder
===================================================
1. Click the Start Button, type “inetcpl.cpl” (without quotation marks) in the Start Search box, and then press Enter.
2. Select the "General" tab, then click Settings in Browsing History area.
3. Click the “View Files” button. The "Temporary Internet Files" folder will open.
4. In the Windows Explorer address box, click the folder name that comes before Temporary Internet Files.

For example: If the Windows Explorer address box shows "Local -> Microsoft -> Windows -> Temporary Internet Files", please click “Windows” in the address bar.

5. Click the “Organize” button, and then click “Properties”.
6. In the pop up window, click on the “Security” tab.
7. Click the Edit button, and check if your user name is listed in the upper pane of the open window. If not, please perform the following steps to add it. If your user name is listed, please proceed to step 9.
8. Click the Add button, input your user name, click on Check Names button and click OK.
9. Select the name in the list, in the lower pane, and make sure that the check box for Full Control and Allow is selected.
10. Clear all the check boxes in the Deny column.
11. Use the same method to configure all the other accounts listed in the upper pane to make sure that the Deny columns are all cleared.
12. Click the OK button to save settings.
13. Start Internet Explorer 7 and check whether the issue occurs.

For more information regarding this issue, please refer to the following link.
The "File Download – Security Warning" dialog box opens when you try to open Internet Explorer 7
http://support.microsoft.com/?kbid=937409