Remove Favorites Folder from Start menu

To remove the Favorites Menu from your Start menu:

Start the Registry Editor
Go to HKEY_CURRENT_USER \ Software \ Microsoft \ Windows \ CurrentVersion \ Policies \ Explorer
Right-click an open area in the right pane and select New > DWORD Value
Name it NoFavoritesMenu
Double-click this entry and add the value 1
Exit RegEdit and restart Windows

To put your Favorites back on the Start menu, simply rename the value to 0.

This can also be done using TweakUI (you can find it on your CD-ROM in the \tools\reskit\powertoy folder).
Click on the IE4 tab, and remove the check mark from the Show Favorites on Start Menu box.

You can also use my Tweaking Toolbox for Windows, one of it's functions is to remove the Favorites folder from the Start menu.

For more information & free trial, check the Tweaking Toolbox for Windows pages.

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Remove Favorites Folder from Start menu