There is an issue with Internet Explorer 7. 0 while accessing FTP sites through ISA Server 2004/2006 web proxy.
You will be unable to open FTP sites from Web Proxy clients if the username or password contains special characters that need encoding. IE 7.0 has a problem that affects the encoding of characters in URLs in this scenario. To fix this problem, install this hotfix.
If you cannot install the hotfix right away, consider changing the username and password to something that doesn’t contain special characters, as a workaround.
The problem doesnt affect IE 7.0 on SecureNAT or Firewall clients.