The Internet Explorer 7 Blocker Toolkit enables IT Administrators to disable automatic delivery of Internet Explorer 7 as a high-priority update via Automatic Updates and the Windows Update and Microsoft Update sites.
To help our customers become more secure and up-to-date, Microsoft will distribute Internet Explorer 7 as a high-priority update via Automatic Updates for Windows XP and Windows Server 2003 soon after the final version of the browser is released (planned for fourth quarter 2006). Microsoft is making a non-expiring Blocker Toolkit available for those organizations that would like to block automatic delivery of Internet Explorer 7 to machines in environments where Automatic Updates is enabled.
Download IE7 Block tool kit from here
Once you download and extract the package you will see that it is a command line tool. You simply call the script with the computer name and /b