Internet Explorer 8 has made my plugin Feed Folder obselete in functionality and implementation -- which is good!
I made Feed Folder for IE7 because I wanted the Live Bookmarking feature from FireFox. The Feed Folder plugin for IE7 would allow you to display your feeds as virtual folders in your Links Bar. When your feed is updated the virtual folder is updated as well with the new feed items. I use del.icio.us to store all my links so I could add virtual folders of my daily links, my friends blogs links, quick reference links, etc. etc.
My plugin relied on shell folders to implement the virtual folders I described above, but IE8 doesn't support shell folders in the Favorites Bar. But I'm OK with Feed Folder not working in IE8 since there's a much better implementation already there. IE8 does better than my plugin on a number of points: First, there isn't the horrible perf. issue that my plugin had on Vista. Second, when a feed is updated the virtual folder flashes to note the change in status. Third, unread items are bolded and the bolding bubbles up from feeds contained in subfolders. And lastly, the middle click button is supported to open items in a new tab.
Accordingly, I don't plan to work on Feed Folder anymore unless someone comes up with a good reason. Instead I mark Feed Folder deprecated and suggest you use Internet Explorer 8 instead.
To use this feature in IE8 simply drag a feed from your feed list in your Favorites Center onto your Favorites Bar. Or, when viewing a feed, click on the 'Add to Favorites' Star Plus icon thing in the upper left, and select 'Monitor on Favorites Bar'. A .url Internet Shortcut file is produced as usual, but if you open up the .url file you'll see there's some additional info about the feed.