Yes both are installed. IE7 was already installed on the system when RakGS didn't worked. It began working after installing VC2005 (+SP1). If I now uninstall VC2005 again, guess the error will come back. Problem is that you will not get any message about which dll's are missing.

I loaded RakGS into PE Explorer from Heaventools to see it's dependencies.

What I'll do is:

Reinstall XP Home SP2 from image and apply updates for hardware. Then I will not install IE7 and VC2005. I will first look on the test system for missing files that are on the dependencies list here.