What version IE are you trying? And is it set for using passive FTP in the Advanced settings page under options? If you have a firewall or DSL connection (or your friend does) it might need that (or it might need to be off if ya don't).
its the version 6 that comes with XP and yes i have passive on, i tried it with off too, my friends comp is behind the same router so it souldned b the router.
hehe weird it works if i take passive off. thx all i tried it in flash fxp and it gave me a data socket error, thats when i knew that it was passive mode, and not IE. Well Problem solved.